Congressional Record United States Th of America PROCEEDINGS and DEBATES of the 105 CONGRESS, FIRST SESSION

House of Representatives

E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 105 CONGRESS, FIRST SESSION

Vol. 143 WASHINGTON, TUESDAY, JANUARY 21, 1997 No. 4

The House met at 12 noon and was Pursuant to clause 1, rule I, the Jour- The Chair has often reiterated that called to order by the Speaker pro tem- nal stands approved. Members should refrain from ref- pore [Mr. BEREUTER]. f erences in debate to the conduct of f other Members where such conduct is PLEDGE OF ALLEGIANCE not the question actually pending be- DESIGNATION OF THE SPEAKER fore the House, either by way of a re- PRO TEMPORE The SPEAKER pro tempore. Will the gentleman from Ohio [Mr. TRAFICANT] port from the Committee on Standards The SPEAKER pro tempore laid become forward and lead the House in the of Official Conduct or by way of an- fore the House the following commu- Pledge of Allegiance. other question of the privileges of the nication from the Speaker: Mr. TRAFICANT led the Pledge of House. January 21, 1997. Allegiance as follows: I hereby designate the Honorable DOUG BE- This principle is documented on I pledge allegiance to the Flag of the REUTER to act as Speaker pro tempore on pages 168 and 526 of the House Rules this day. United States of America, and to the Repub- lic for which it stands, one nation under God, and Manual and reflects the consistent NEWT GINGRICH, rulings of the Chair in this and in prior Speaker of the House of Representatives. indivisible, with liberty and justice for all. Congresses. It derives its force pri- f f marily from clause 1 of rule XIV which PRAYER MESSAGES FROM THE PRESIDENT broadly prohibits engaging in personal- The Chaplain, Rev. James David Sundry messages in writing from the ity in debate. It has been part of the Ford, D.D., offered the following pray- President of the United States were rules of the House since 1789. er: communicated to the House by Mr. On the other hand, the calling up of We join in the words of the Psalmist Sherman Williams, one of his secretar- a resolution reported by the Commit- who wrote: ‘‘Behold how good and ies. tee on Standards of Official Conduct, or pleasant it is when God’s people dwell f the offering of a resolution as a similar in unity. It is like the precious oil upon question of the privileges of the House, the head, running down upon the beard, IN THE MATTER OF embarks the House on consideration of upon the beard of Aaron, running down REPRESENTATIVE NEWT GINGRICH a proposition that admits references in on the collar of his robes. It is like the Mrs. JOHNSON of Connecticut. Mr. debate to a Member’s conduct. Discipli- dew of Hermon, which falls on the Speaker, pursuant to rule IX and by dinary matters by their very nature in- mountains of Zion. For there the Lord rection of the Select Committee on volve personalities. has commanded the blessing, life for- Ethics, I send to the desk a privileged Still, this exception to the general evermore.’’ resolution (H. Res. 31) in the matter of Among all Your bountiful favors to rule against engaging in personality— Representative NEWT GINGRICH, and us, O gracious God, is the knowledge admitting references to a Member’s ask for its immediate consideration. that You have created every person in conduct when that conduct is the very The Clerk read the resolution, as fol- Your image and You have blessed every lows: question under consideration by the person with those gifts that make us House—is closely limited. This point HOUSE RESOLUTION 31 truly human: the gifts of justice and was well stated on July 31, 1979, as fol- mercy, the gifts of peace and good will, IN THE MATTER OF REPRESENTATIVE NEWT lows: While a wide range of discussion GINGRICH the gifts of unity and common purpose. is permitted during debate on a dis- Resolved, That the House adopt the report May all Your blessings, O God, that ciplinary resolution, clause 1 of rule of the Select Committee on Ethics dated flow from the early morn to the last XIV still prohibits the use of language light, be with each of us and remain January 17, 1997, In the Matter of Represent- ative Newt Gingrich. which is personally abusive. This is re- with us all our days. corded in the Deschler-Brown Proce- In Your name we pray. Amen. The SPEAKER pro tempore. The res- dure in the House of Representatives in f olution constitutes a question of privilege and may be called up at any time. chapter 12, at section 2.11. THE JOURNAL ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE On the question now pending before The SPEAKER pro tempore. The The SPEAKER pro tempore. Before the House, the resolution offered by Chair has examined the Journal of the we proceed, the Chair will have a state- the gentlewoman from Connecticut, last day’s proceedings and announces ment about the decorum expected of Members should confine their remarks to the House his approval thereof. the Members. in debate to the merits of that precise

b This symbol represents the time of day during the House proceedings, e.g., b 1407 is 2:07 p.m. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor.

H171 H172 CONGRESSIONAL RECORD — HOUSE January 21, 1997 question. Members should refrain from Each Member of Congress, especially b 1215 remarks that constitute personalities those in positions of leadership, shoul- Despite the pressures, we bring you with respect to members of the Com- ders the responsibility of avoiding even today a bipartisan recommendation re- mittee on Standards of Official Con- the appearance of impropriety. Rep- solving the most complex charge duct or the Select Committee on Eth- resentative GINGRICH failed to exercise against Representative NEWT GINGRICH. ics or with respect to other sitting the discipline and caution of his office I ask for both my colleagues’ rejection Members whose conduct is not the sub- and so is subject to penalty today. ject of the pending report. Finally, As I have said, the penalty rec- of the partisanship and animosity that Members should exercise care to main- ommended by the committee is tough has so deeply permeated the work of tain an atmosphere of mutual respect. and unprecedented. In past cases of the House and for their support of the On January 27, 1909, the House adopt- this nature, the House has reprimanded committee’s resolution. ed a report that stated the following: It a Member only where the Member was Mr. Speaker, I reserve the balance of is the duty of the House to require its found to have intentionally made false my time. Members in speech or debate to pre- statements to the Ethics Committee. Mr. CARDIN. Mr. Speaker, I yield serve that proper restraint which will In this case, the committee rec- myself such time as I may consume. permit the House to conduct its busi- ommended a reprimand of Representa- ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE ness in an orderly manner and without tive GINGRICH even though the state- unnecessarily and unduly exciting ani- ment of alleged violations did not as- The SPEAKER pro tempore. The gen- mosity among its Members. sert that he intentionally misled the tleman will suspend. This is recorded in Cannon’s Prece- committee. Likewise in past cases The Chair notes a disturbance in the dents in volume 8 at section 2497. where the committee imposed mone- visitors’ gallery in contravention of The report adopted on that occasion tary sanctions on a Member, the com- the laws and the rules of the House. responded to improper references in de- mittee found that the Member had The Doorkeepers and police, the Chair bate to the President, but it articu- been personally enriched by the mis- believes, have already acted, but shall lated a principle that occupants of the conduct. The committee made no such act to remove from the gallery those Chair over many Congresses have held finding against Representative GING- persons participating in a disturbance. equally applicable to Members’ re- RICH, yet recommends that a cost reim- If there is an outburst from the visi- marks toward each other. bursement of $300,000 be paid to the tors’ gallery, the Chair will make this The Chair asks and expects the co- House by him. statement but will insist on order. operation of all Members in maintain- The report before us contains several ing a level of decorum that properly The Chair recognizes the gentleman hundred pages of exhibits and a de- dignifies the proceedings of the House. from Maryland [Mr. CARDIN]. The gentlewoman from Connecticut tailed analysis of the subcommittee’s Mr. CARDIN. Mr. Speaker, as I have findings. The allegations and the key [Mrs. JOHNSON] is recognized for 1 hour. said, this is a sad moment for the Mrs. JOHNSON of Connecticut. Mr. facts supporting them were laid out by House of Representatives. One of our Speaker, I ask unanimous consent that the special counsel during a public Members has admitted to a serious vio- debate on the resolution be extended hearing on January 17. The commit- lation of the House rules. This process for a half an hour. tee’s recommendations before you and this admission affects not only The SPEAKER pro tempore. Is there today end 2 long years of work. that Member but each Member who Throughout this process we never objection to the request of the gentle- serves in this body. While I believe that lost sight of our key goals: full and woman from Connecticut? is true of any ethics proceeding, it is complete disclosure of the facts and a There was no objection. particularly true and particularly trou- bipartisan recommendation. We accom- The SPEAKER pro tempore. The gen- blesome in this case because the of- plished both. Even though it would tlewoman from Connecticut [Mrs. fending Member is the Speaker of the have been easy for Republicans or JOHNSON] is recognized for 90 minutes. House, the third ranking official in our Mrs. JOHNSON of Connecticut. Mr. Democrats to walk away from the Government. Speaker, for purposes of debate only, I process at many stages, we did not, be- yield 45 minutes to the gentleman from cause we believed in this institution We have received the report and rec- Maryland [Mr. CARDIN], pending which and in the ethics process. ommendation from the special counsel. I yield myself such time as I may The investigative subcommittee was Mr. GINGRICH has agreed with the judg- consume. ably chaired by Representative PORTER ment of the special counsel. In addition Mr. Speaker, I rise as chairman of GOSS. Representatives BEN CARDIN, to the report, the recommendation of the Select Committee on Ethics to lay STEVE SCHIFF, and NANCY PELOSI, along sanctions represents the bipartisan before you the committee’s bipartisan with Mr. GOSS deserve the gratitude of work produced by our investigative recommendation for final action on the this House for the extraordinary work- subcommittee. The report in the rec- matter of Representative NEWT GING- load they shouldered and for their dedi- ommendation of sanctions has been RICH. The committee recommends that cation to pursuing each issue until overwhelmingly approved by the full Representative GINGRICH be rep- they reached consensus. Together with Committee on Standards of Official rimanded and reimburse the House Mr. James Cole, the special counsel, Conduct and deserves the support of $300,000. The penalty is tough and un- they laid the groundwork for the bipar- this House. precedented. It is also appropriate. No tisan conclusion of this matter. I want Let me begin by saying how proud I one is above the rules of the House of to thank Mr. CARDIN, the current rank- am of the work of the investigative Representatives. ing member, as well, for working with subcommittee. In my judgment, all This matter centered on two key me through difficult times to enable four members of the subcommittee questions: whether the Speaker vio- the bipartisan Ethics Committee proc- maintained their commitment to a lated Federal tax law and whether he ess to succeed. process that was fair to the respondent intentionally filed incorrect informa- In the last 2 years the committee was as well as the House and its rules. I tion with the Ethics Committee. While forced to conduct its work against the want to commend and compliment the the committee investigated these ques- backdrop of harsh political warfare. It work of our chairman, the gentleman tions extensively, its findings were in- is the first time ever that members of from Florida [Mr. GOSS], for the ex- conclusive. Rather, the committee the Ethics Committee have been the traordinary work that he did as well as found that Representative GINGRICH target of coordinated partisan assaults the work of the gentleman from New brought discredit to the House by fail- in their districts. Coordinated political Mexico [Mr. SCHIFF] and the gentle- ing to get appropriate legal advice to pressure on members of the Ethics woman from California [Ms. PELOSI] ensure that his actions would be in Committee by other Members is not and the work of the subcommittee. I compliance with tax law and to oversee only destructive of the ethics oversight also want to recognize the extraor- the development of his letters to the process but is beneath the dignity of dinary service performed by Jim Cole, committee to ensure they were accu- this great institution and those who our special counsel; Kevin Wolf, his as- rate in every respect. serve here. sistant; and Virginia Johnson from the January 21, 1997 CONGRESSIONAL RECORD — HOUSE H173 Committee on Standards of Official with that judgment. In all, almost $1.5 sues and he was embarrassed by the ob- Conduct. million was spent by these tax exempt vious inaccurate letters. He said he Before commenting on the substance organizations, costing the U.S. Treas- never intended to mislead the commit- of the resolution before us, I feel obli- ury hundreds of thousands of dollars in tee. But Mr. GINGRICH’s actions with gated to point out the severe problems lost tax revenues that should have been respect to the understanding reached that have plagued the process. The 1- paid. with the Committee on Standards of year delay in 1995 in enlisting the serv- Fourth, one need not reach a conclu- Official Conduct belies his statement. ices of the special counsel was wrong. sion on the tax issues to find that Mr. Mr. GINGRICH, through his attorneys, We have some evidence that this delay GINGRICH has violated our ethical had entered into an agreement with may have been part of the strategy by standards. From his involvement in the the committee. That agreement pro- allies of Mr. GINGRICH. In sharp con- American Campaign Academy case, vided ‘‘Mr. GINGRICH agree that no pub- trast to the good faith, bipartisan co- Mr. GINGRICH knew that pursuing these lic comment should be made about this operation which governed the sub- activities posed a risk of potential tax matter while it is still pending. This committee’s work, the orderly process law violations. The ACA case estab- includes having surrogates sent out to collapsed on December 21, 1996, after lished limits on political activities of comment on the matter and attempt to the matter was forwarded to the full tax exempt organizations. mischaracterize it.’’ committee. Ignoring the advice of spe- It is important to understand that I am sure that Members of this House cial counsel and the subcommittee, the this case involved similar facts and are well aware of public comment since Republican leadership in the House im- some of the same parties as the matter the release of our findings on December posed an unrealistic deadline for the investigated by the subcommittee. In 21. As the special counsel States, ‘‘In completion of our work to coincide fact, in response to a question from the the opinion of the subcommittee Mem- with the Presidential inauguration. special counsel, Mr. GINGRICH stated, bers and the special counsel, a number The schedule agreed upon by the full and I quote: ‘‘I lived through that case. of press accounts indicated that Mr. Committee on Standards of Official I mean I was very well aware of what GINGRICH had violated that agree- Conduct for full public hearings on the the ACA case did and what the ruling ment,’’ the finding of the bipartisan subcommittee findings was unilater- was.’’ All experts agreed that he should committee and our special counsel. Mr. ally and improperly canceled. These have sought tax advice before using tax GINGRICH’s violation of the no com- partisan actions were aimed at shield- exempt organizations to pursue his po- ment agreement raises serious ques- litical agenda. ing Mr. GINGRICH from a full airing of tions about the extent to which he has In the words of our special counsel the charges to which he has admitted deliberately sought to mislead the Mr. GINGRICH’s actions suggest that guilt. committee in other instances. During the past 5 days the gentle- ‘‘either Mr. GINGRICH did not seek legal Beyond the events of December 21, advice because he is aware that it woman from Connecticut [Mrs. JOHN- 1996, Republican operatives close to Mr. would not have permitted him to use a SON] and I have worked closely to- GINGRICH conducted an ongoing cam- 501(c)(3) organization for his projects,’’ gether to use these days as effectively paign to disrupt the committee’s work. or he was ‘‘reckless in an area that was as possible to achieve two objectives: It is relevant for this House to consider fraught with legal peril.’’ these circumstances in determining the First, in the face of an unrealistic time Finally, the House must make a degree of Mr. GINGRICH’s culpability in limit, to get the broadest possible pub- judgment on the question of whether lic release of the information con- providing the Committee on Standards Mr. GINGRICH deliberately misled the tained in the subcommittee’s report; of Official Conduct information that committee. Mr. GINGRICH submitted was not accurate, reliable, and com- and second, to arrive at a fair, biparti- two letters to the committee that he plete. It is up to the Members of this san recommendation on sanctions. We now admits contained information have achieved both objectives, and for about GOPAC that was inaccurate. The House to determine the appropriate that I would like to express my appre- facts surrounding these inaccuracies sanction for the violations committed by Mr. GINGRICH. This is not a vote on ciation to the chairwoman. The report were well known to Mr. GINGRICH. Mr. whether Mr. GINGRICH should remain details the reason why the committee GINGRICH had read the letters before has found that Mr. GINGRICH has com- submitting them to the committee. Speaker of the House. Members need mitted a serious violation of the House When the investigative subcommittee time to become familiar with the fac- ethics rules. I urge each of my col- specifically called the contradiction in tual record presented in the special leagues to read the report and the ac- the letters to Mr. GINGRICH’s attention, counsel’s report and to consider the se- companying exhibits. he once again defended them as accu- riousness of these violations that have I will now briefly review the findings rate even though they were clearly just come to light during the past 4 of the special counsel’s report. First, wrong. The misleading letters were days. we must disregard the notion that this sent with the express intent of persuad- In the days and weeks to come Mr. case involves a college professor en- ing the Committee on Standards of Of- GINGRICH and each Member of this gaged in a normal academic classroom ficial Conduct to dismiss the pending House should consider how these activity. The respondent in this case is charges. They had the effect of mis- charges bear on the question of the not Professor GINGRICH, but Represent- leading the committee. It stretches speakership. The resolution before us, ative GINGRICH, a Member of the House, credibility to conclude that the re- the House, today is a sanction for Rep- minority whip and then Speaker of the peated misstatements were innocent resentative GINGRICH for the ethics vio- House, who had a vision to launch a po- mistakes. lations that he has committed. Accord- litical movement to change the coun- The linchpin of these findings is stating to the House rules a reprimand is try, in his words, from a welfare state ed clearly in the report of special coun- appropriate for serious violations of to an opportunity society. sel: ‘‘Of all the people involved in ethical standards. Sadly, Mr. GING- Second, over a 5-year period Mr. drafting, reviewing, or submitting the RICH’s conduct requires us to confirm GINGRICH improperly commingled po- letters, the only person who had first- that this case involves infractions of at litical activities with tax exempt orga- hand knowledge of the facts contained least that level of seriousness. He has nizations. When GOPAC ran short of within them with respect to the Re- provided inaccurate and misleading in- funds, Mr. GINGRICH sought contribu- newing American Civilization course formation to the Committee on Stand- tions from several tax exempt entities was Mr. GINGRICH.’’ ards of Official Conduct and there is in order to continue his partisan politi- The special counsel concludes: ‘‘Ei- significant evidence that he intended cal crusade. ther Mr. GINGRICH intentionally made to do so. Third, there is ample evidence that misrepresentations to the committee The recent history of congressional he did so in violation of tax laws. Celia or he was again reckless in the way he ethics sanctions indicate the House has Roady, the tax expert retained by the provided information to the committee imposed the sanction of reprimand committee, has concluded that the tax concerning a very important matter.’’ when a Member has been found know- laws were violated, and it is not even a Mr. GINGRICH’s defense is that he has ingly to have given false statements. close call. Our special counsel agrees always been very sensitive to ethics is- But the earlier cases did not involve H174 CONGRESSIONAL RECORD — HOUSE January 21, 1997 giving false statements to the Commit- Mr. Speaker, I reserve the balance of think that is what they were doing. tee on Standards of Official Conduct it- my time. They were trying to use political pres- self in response to an inquiry from the b 1230 sure to get a result in what is essen- Committee on Standards of Official tially a judicial type of deliberative Conduct, and Mr. GINGRICH’s case in- Mrs. JOHNSON of Connecticut. Mr. body. That was their intent. volves more than just giving false in- Speaker, I yield such time as he may That was one of the most unethical formation to the committee. Mr. GING- consume to the gentleman from New things I have seen since becoming a RICH has also admitted to directing a Mexico [Mr. SCHIFF], a distinguished member of the Committee on Stand- political empire that made extensive member of the subcommittee. ards of Official Conduct. use of tax exempt entities for political Mr. SCHIFF. Mr. Speaker, I first What I want to emphasize now is why fundraising purposes. As a result of all want to join in the compliments to the we are here today. I want to point out these actions, the reputation of the other committee members and to our that the statement made, that there House of Representatives has been staffs and special counsel because, even have been many new facts revealed in damaged and tax dollars have been though we had many disagreements the last several days, in my judgment lost. along the way, and obviously still have is not correct. We are here because of a But there is still more. This is not some disagreements, I think we made statement of alleged violation found by the first time Mr. GINGRICH has had the best possible effort to get us here the ethics subcommittee and released ethical problems that drew critical ac- today. publicly on December 21, 1996, to which tion by the Committee on Standards of I agree with the gentleman from the Speaker acknowledged. And those Official Conduct. On other occasions he Maryland [Mr. CARDIN] this is a sad violations have not changed. has been sighted by this committee for day. It is a sad day when any Member What has changed is the reporting of violating House rules. The American is here because of a recommendation of those violations in the news media over public has not forgotten the lucrative the Committee on Standards of Official the last several days. What I have seen book advance contract that the incom- Conduct. Last time I was here it was in the news media in various forms is ing Speaker of the House was forced to because a Democratic colleague was some significant misstatements of renounce under public pressure. Our here on our recommendations. I was what the violations are. But I have to committee concluded in regards to that not happier then because it was a Dem- add that I do not believe that that was book deal: ‘‘At a minimum this creates ocrat and not a Republican then. I in this case the fault of the news the impression of exploiting one’s of- think it is a sad day when it is a Mem- media. It is their job to be critical of fice for personal gain. Such perception ber of the House. us, and it is our responsibility to re- is especially troubling when it pertains Nevertheless, I think the House can to the Office of the Speaker of the spond if we think it is appropriate. be proud of the fact there is account- But I want to make it very clear House, a constitutional office requiring ability for its Members. I wish such ac- the highest standards of ethical behav- what I think happened was an unfortu- countability could be found from every nate matter of timing, that on Friday ior.’’ area of our government. Because of all those factors, these of last week, our hearing did not begin Second, I am sorry that in the ren- violations require a penalty more seri- and our written report was not avail- dition of facts I just heard, there were ous than a reprimand. Considering all able until 3 o’clock on Friday after- certain partisan conclusions that these matters, I urge this House to noon. Some reporters have told me eliminated other conclusions which I adopt the resolution before us. The res- there were not enough copies to go guess could be stated from the other olution incorporates the recommenda- around. So they are trying to form tion of the special counsel, the inves- side. For example, it was said that deadlines for their programs or for tigative subcommittee, the full Com- there was an attempt made by our their newspapers with a report that is mittee on Standards of Official, and chairwoman, the gentlewoman from over 200 pages long. I think it is en- Connecticut [Mrs. JOHNSON] who got us Mr. GINGRICH. The sanction we rec- tirely understandable that some errors ommend is somewhere between a rep- here, when many people expected along were made at first. rimand and a censure. It provides a the way we could never get here; but Nevertheless, I think some errors reprimand plus a required $300,000 con- through her leadership we are here were made. They were made because tribution by Mr. GINGRICH to the cost today. Mr. Cole’s report attempted to be a of these proceedings. In my view this There was the accusation that our soup-to-nuts, beginning to end expla- payment should come from his per- chairwoman deliberately tried to scut- nation of what we did in the ethics sub- sonal resources because it is a personal tle the information getting to the committee to get to where we are responsibility. Members in order to mitigate any ef- today. In going through step by step, Mr. Speaker, with today’s vote I will fect on Congressman GINGRICH. Quite he quite properly, in my judgment, said have completed my service on the the contrary. Our chairwoman and the we had this choice to make and we had Committee on Standards of Official rest of us had an agreed to up to 5 days this fact and we handled it as follows, Conduct. Over the past 6 years and 1 of public hearings. Those were changed and so forth. But what I have seen as month I have participated in many eth- only when our Democratic colleagues reported as a final conclusion, certain ics matters. Among the issues that we on the Committee on Standards of Offi- excerpts from that report were had before the committee during my cial Conduct held a press conference in intermediary at best. tenure has been not only this matter which they said the most important The final conclusion of the sub- but the House bank and post office product we could produce would be a committee did not change. That final matters, both of which exposed many written report that Members could conclusion is, first, that Mr. GINGRICH Members of this House, including its consider before they vote. should have sought competent legal, leadership, to embarrassment either That left our Chair, in my judgment, professional tax advice before he began for misdeeds or for mismanagement. I no alternative but to change directions his procedures that involved the use of must say, however, that the matter be- and to postpone the public hearing, a tax-exempt foundation, which under fore us today has brought a threat to which we ultimately did have anyway, the law is called a 501(c)(3) organiza- the Committee on Standards of Official in favor of trying to produce the writ- tion. Conduct that far exceeded anything I ten report by this date which we have Second, that materials were sent to have seen. The committee was subject now accomplished. the Committee on Standards of Official to repeated attempts to obstruct its There has been no mention of the Conduct in response to questions from work and improperly interfere with its fact that Members on the Republican the Committee on Standards of Official investigation. As I leave the Commit- side particularly were subject to enor- Conduct that the Speaker should have tee on Standards of Official Conduct, I mous political attack in their districts. known were inaccurate. That is the hope that the incoming Members will If I were still a district attorney, a ca- final finding, if you will, of the sub- find the process has survived and will reer I had before I got to Congress, I committee. continue to serve this House and the would have certain leaders arrested for The report goes through all of the people of our Nation. attempted jury tampering, because I events, and I heard the gentleman from January 21, 1997 CONGRESSIONAL RECORD — HOUSE H175

Maryland [Mr. CARDIN] make reference our behalf and the Speaker’s attorney, Mr. Speaker, the gentleman from to a number of the events. But the Mr. Evans, on his behalf. So we got re- New Mexico [Mr. SCHIFF] is correct, we findings did not change. All of the ports on it. But the report we got back are in agreement on the recommenda- events would include things like we on was that Speaker NEWT GINGRICH tion. We put different emphasis on the subcommittee interviewed every- agrees that because he holds a unique some of the facts. Mr. GINGRICH clearly, body we could find who had anything position in the House he should receive in my view, had ample opportunity to to do with the preparation of those two a unique penalty, so there is no doubt know about the statements in his let- letters that were inaccurate. even the Speaker of the House is not ters. He did indicate he hired an attor- What we found, in my judgment, if it above the rules. ney in order to draft the two letters. were not so serious, and I recognize I would hastily add, however, two Let me just read, if I might, from the how serious it is, it would really be things, and conclude with this. The transcripts as to the exchange between called a comedy of errors. first is that I think there is room for Mr. Cole and Mr. Baran, Mr. Baran What happened was the letters were this to be made a standing procedure in being Mr. GINGRICH’s attorney. prepared in Mr. GINGRICH’s law firm certain cases. For example, I saw what Mr. Cole: ‘‘Would you have made sure that sent the letters first to a staff in my judgment were a number of friv- that he had read it and approved it, or member in Mr. GINGRICH’s office. The olous complaints filed with the Com- just the fact he read it is all you would law firm thought that the staff mem- mittee on Standards of Official Con- have been interested in,’’ referring to duct which had no other purpose than ber would correct any factual Mr. GINGRICH? misstatements. The staff member to be leaked to the press and create bad Mr. Baran said, ‘‘No, I would have thought the law firm had already publicity for whomever was the target wanted him to be comfortable with this checked out the facts. So nobody of those complaints. It seems to me on many levels.’’ checked out the facts to see if they that the precedent we have established Mr. Cole: ‘‘Were you satisfied he was were accurate. But the most important here should apply to those who are comfortable with it prior to filing it thing is that Mr. GINGRICH was never found by the committee to have filed with the committee?’’ involved in the preparation of those frivolous complaints. Mr. Baran: ‘‘Yes.’’ Finally, on how the funds should be letters at any point until the very end Let me also point out that after this, paid if the House adopts the rec- where he acknowledges he signed them, after we pointed out to Mr. GINGRICH ommended penalty, we were delib- he should have read more carefully, the inconsistency in the letters, Mr. erately silent on that. My colleague, and he is responsible for that before GINGRICH wrote another letter back to the gentleman from Maryland [Mr. this House of Representatives. the committee. Clearly he had time to ARDIN], is most certainly entitled to I would point out that in a letter of C review the inconsistencies by that his opinion, but the subcommittee and October 1996 that he prepared himself time. The October 31, 1996, letter, in the committee made no determination. with his staff, he gave us entirely accu- Insofar as I have studied the prece- that letter he still maintains his inno- rate information about the matters dents on financial remuneration to the cence on inconsistencies in the letter, that are under consideration here. I Government, we have never established even though the letters were clearly in- think it is pretty obvious you do not as a matter of law how these funds can accurate, he knew they were inac- give accurate information in October be paid. curate, and he had a chance to reread and then you can deliberately prepare Mr. GINGRICH, if he does get this as a the letters and correct the record. 1 information the following September final penalty, understands all the rami- Mr. Speaker, I yield 11 ⁄2 minutes to and March that nobody would know the fications, I am certain he does not need the gentlewoman from California [Ms. difference of. me to explain them to him or, for that PELOSI], my colleague on the Commit- Based upon the allegation, the viola- matter, any of my colleagues on the tee on Standards of Official Conduct, tions we found, the Committee on other side. But the fact is the commit- who was on the investigative sub- Standards of Official Conduct on a 7-to- tee was silent deliberately on how any committee and who has made a great 1 vote, full committee now, entire com- such funds should be paid. It is my un- contribution to this process and has mittee, recommended the following derstanding there are at least some been an extraordinary member of our penalty: It recommended a reprimand precedents for campaign funds, for ex- Committee on Standards of Official and a cost assessment of $300,000. In ample, being used to reimburse the Conduct. some meetings earlier with members, I Government, and certainly we all know Ms. PELOSI. Mr. Speaker, I thank have heard some members say that that the Chief Executive of the United the gentleman for yielding me time that is unique and they are concerned States has a legal defense fund in and for his leadership and guidance about that penalty being unique be- which he raises money. So I am just throughout this process. Clearly with- cause, although we have imposed cost saying that whatever the options are out his involvement, we would not be assessments before, we have never done to NEWT GINGRICH as a Member of the here today with a bipartisan rec- so in the past for the cost of the inves- House, they have not been precluded le- ommendation for a sanction for the tigation. gally by the committee, and in my Speaker of the House. That is basically what we did. We set judgment they should not be. Mr. Speaker, as a member of the in- $300,000 as the estimated cost of that With that, Mr. Speaker, I just want vestigative subcommittee, I would like portion of the investigation that dealt to again commend our chairwoman, to take this opportunity to publicly with clearing up the misstatements the gentlewoman from Connecticut thank the gentleman from Florida, that we received, which may have [Mrs. JOHNSON], my fellow members of PORTER GOSS, our Chair of the inves- begun to be prepared in Mr. GINGRICH’s the committee, and say I believe we tigative subcommittee, again acknowl- law firm, but for which he is respon- have come up with an appropriate pen- edge the gentleman from Maryland, sible as a Member of the House. alty, which some think is too harsh, Mr. CARDIN, as ranking member for his I want to tell all Members that they some think is too lenient. That tells service there, as well as to say how do not need, in my judgment, to be me we are about where we ought to be. much I learned from the gentleman concerned about the precedent value, I hope the House will adopt it. from new Mexico, Mr. SCHIFF, in the because I believe everyone concerned ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE course of our service there. understood that this is a unique pen- The SPEAKER pro tempore (Mr. BE- Clearly, from the debate so far, you alty because the Speaker of the House REUTER). The Chair will request that can see that we had many unresolved is a unique official in our institution. visitors in the gallery, in coming and difficult issues to deal with, and under In fact, that is the reason we decided going, refrain from any audible disrup- the leadership of the gentleman from to, on the subcommittee’s part, pro- tion of the proceedings. Florida [Mr. GOSS], we went through pose a unique penalty, and we got Mr. CARDIN. Mr. Speaker, I yield that. word, I have to say ‘‘got word,’’ be- myself such time as I may consume I want to also commend our special cause we never met with the Speaker briefly to comment on some of the counsel, James Cole, for making us to discuss the penalty. All of the nego- points raised by the gentleman from stick to the facts, the law, and the eth- tiations were by our special counsel on New Mexico [Mr. SCHIFF]. ics rules as those elements that were H176 CONGRESSIONAL RECORD — HOUSE January 21, 1997 the only matters relevant to our deci- tained 3 counts: Mr. GINGRICH’s activi- of Official Conduct. It is interesting to sions, and many thanks to Kevin Wolf ties on behalf of ALOF in regard to me that Speaker GINGRICH has repeat- and Virginia Johnson for their assist- AOW and ACTV, and the activities of edly stated that ethics are important ance and professionalism. others in that regard with his knowl- to him. Why, then, did he say that he I heard my colleague, the gentleman edge and approval, constituted a viola- was too busy to respond to the commit- from New Mexico [Mr. SCHIFF], say in tion of ALOF’s status under section tee accurately? Again, either he was his earlier days as a prosecutor he 501(c)(3). trying to get complaints dismissed and might entertain thoughts of bringing Second, Mr. GINGRICH’s activities on an accurate answer would not achieve jury tampering charges. If he decides behalf of Kennesaw State College that end, or that ethics were not im- to do that, I hope that the gentleman Foundation, the Progress and Freedom portant enough for him to take the will include in his package the dirty Foundation, and Reinhardt College in necessary time. tricks memo that is now in the public regard to the Renewing American Civ- As our colleague, Mr. CARDIN, has record that is a written document ilization course, and other activities in pointed out, Mr. GINGRICH gave one an- about attempts to undermine the eth- that regard, with his knowledge and swer in the earlier letter in order to re- ics process directly by the Republican approval, constituted a violation of spond to a complaint regarding use of House leadership. those organizations’ status under official resources for his course, so he Let me say though we did produce a 501(c)(3). said GOPAC did it. Then when we bipartisan product. I hope our work And, third, Mr. GINGRICH had pro- asked the question if GOPAC and will serve as a foundation for a biparti- vided information to the committee, 501(c)(3) cannot be that cozy, then he san solution to be agreed to today. directly or through counsel, that was said GOPAC did not do it; and then in Today, others have said it, is a sad material to matters under consider- the third communication to the com- day. I think it is a tragic day. Here in ation by the committee, which Mr. mittee, he stood by his previous let- the House of Representatives we will GINGRICH knew or should have known ters. sanction a sitting Speaker for the first was inaccurate, incomplete, and unreli- The gentleman from New Mexico [Mr. time. It is an unwelcome task to pass able. SCHIFF] prefers to call it a comedy of judgment on any of our colleagues, but These were not the alleged violations errors. I think it is violating our trust we have a responsibility to uphold ethi- that were passed out at the committee that we have among Members. Every cal standards called for in the rules and because we did not come to agreement day that we speak to each other in this expected by the American people. on them, but they are the original alle- House, we refer to each other as the I associate myself with the gen- gations by the special counsel. I think gentleman from Georgia, the gentlewoman from Connecticut, the gentleman from Maryland, Mr. CARDIN’s, everyone is well aware that we have tleman from Maryland. We trust each remarks about the process. We should charged the Speaker in our statement other that we will deal truthfully with not have to choose to make the Amer- of alleged violations that he did not ensure that the law was complied to in each other. ican people aware of either the hearing, Unfortunately, in terms of Speaker a full hearing, or the report. But since his activities, and that he gave infor- GINGRICH’s dealings with the commit- mation to the committee that was not we have a report, I urge everyone to tee on a number of occasions, and in read it. I think it is very instructive accurate. Think how much easier it would be if his violation of the agreement under and gives lie to many of the which we would go forward in bringing mischaracterizations that have been we could all use the 501(c)(3), not con- this issue to a conclusion, Mr. GING- made about the violations that the sult a lawyer, and build our political RICH’s statements lead me to one con- INGRICH agenda around tax deductible consider- committee charged Mr. G with clusion: that Mr. GINGRICH, in his deal- ations. The American people in their and those which he admitted to. ings with the committee, is not to be generosity give the opportunity to b 1245 believed. I conclude also that Mr. GING- charitable institutions to do charitable RICH gave these different answers not The last few weeks have been dread- work. That does not include subsidiz- because it was a comedy of errors, but ful. But we have an opportunity to say ing our political activity. At the grass- because he thought he would get away today to the American people that roots level we have always had to com- when we come to Washington, we do with it. ply with the law in relationship to po- I was particularly concerned about not check our integrity at the beltway, litical activity and 501(c)(3). If we have the ‘‘too busy’’ defense. We cannot say and that power is not a license to ig- to do it at the grassroots level, so that ethics is important to us and then nore ethical standards. We also have an should the Speaker of the House. say we are too busy to answer the opportunity to tell the American peo- As the counsel mentions in his state- central question asked by the Commit- ple that sanity can reign in the Con- ment, some members of the committee tee on Standards of Official Conduct. gress by demonstrating our ability to and the special counsel were in favor, Maintaining a high ethical standard is agree and disagree in a respectful way. as I mentioned before, of the original a decision, and it requires making it a The American people gave us the privi- proposal. After much deliberation, all priority. It is not just something we do lege to serve; they expect us not only four of us could agree on a statement when we are not too busy. to make the laws and to obey the laws, of alleged violations that despite, in We expect the Speaker of the House but also to live up to a high ethical quotes, ‘‘Despite significant and sub- to be busy. We also expect the Speaker standard. stantial warnings, Mr. GINGRICH did of the House to be ethical. Speaker So today we are here to address the not seek the legal advice to ensure that GINGRICH himself has stated that the failure of Speaker GINGRICH with re- his conduct conformed with the provi- Speaker must be held to a higher gard to the laws governing charitable sions of 501(c)(3),’’ with the law. standard. I do not put any additional contributions and GOPAC, and his fail- Why did he not? Why did he not? Ei- burden on the Speaker. I think all ure to respond accurately and reliably ther because Speaker GINGRICH knew Members of Congress should be held to to the Committee on Standards of Offi- what the answer would be no, from an a higher ethical standard. cial Conduct. attorney, ‘‘No, you cannot do this,’’ or When new Members arrive in Con- I would like to just take a moment to he was reckless in conforming with the gress, one of the first documents they refer to the book, because as I asked law. The committee decided that re- receive is the House Ethics Manual. people to read it, I want to point out gardless of the resolution of the And one of the first responsibilities im- the statement of alleged violations 501(c)(3) tax question, Speaker GING- pressed upon all of us is to uphold a which was originally set forth by the RICH’s conduct was improper, did not high ethical standard. Clearly, Speaker special counsel. This is on page 155. reflect credibly on the House, and was GINGRICH did not live up to his own Based on the information described deserving of sanction, serious sanction, professed ethical standards of the above, the special counsel proposed a and Speaker GINGRICH agreed. House, and, indeed, to the ethical statement of alleged violations to the The next issue in my view is the standards in this book. subcommittee on December 12. The most serious, that of not dealing hon- I urge my colleagues to read this restatement of alleged violations con- estly with the Committee on Standards port. I think when you do, you will see January 21, 1997 CONGRESSIONAL RECORD — HOUSE H177 that it gives lie to the mis a recommendation which is today be- course of action in tax areas he knew characterizations of our Republican fore this House, for an official rep- to be sensitive and controversial. And colleagues that the violations were rimand and a $300,000 cost assessment even more troubling, I found the fact nothing, or that they were like tres- to Mr. GINGRICH as sanction for his vio- that the committee was given inac- passing or double parking. Either our lation of House rules and as partial re- curate, unreliable, and incomplete in- colleagues were ill-informed, and that imbursement for the costs of the information to be a very serious failure is what I choose to believe, or they quiry that ensued. This is unquestion- on his part. have a cavalier regard for the tragedy ably a serious sanction, but one that is b 1300 of the Speaker admitting bringing dis- also fair and appropriate, in my view, Now, it is certainly true that we had credit to the House of Representatives as evidenced by the fact that indeed more than enough facts and extenuat- which he wants to lead. Mr. GINGRICH himself has agreed to it. Now we come to the penalty. As you The Committee on Standards of Offi- ing circumstances to consider. We all know, we have a financial penalty be- cial Conduct, functioning independ- know a Member of Congress wears cause we believe that the inaccurate ently of leadership on both sides of the many hats, for our official lives, our statements that the Speaker said to us aisle, is supposed to find the truth campaign lives, our private lives, our business lives or whatever, and knowl- prolonged the process. There are other through an investigative process. It is edge of how careful we must be in reasons why there is a financial pen- not designed to protect errant Mem- wearing those hats is fundamental to alty, but that was one of them. And the bers, nor is it designed to permit par- our job. We all have an extra obligation subcommittee concluded, and I quote, tisan zealots to destroy Members or to to be sure our activities are appro- ‘‘that because these inaccurate state- score political points. ments were provided to the committee, In this case, the committee’s mem- priate, no matter which hat we are wearing. That is an obligation that this matter was not resolved as expedi- bers were subject to frequent unfair each of us signs up for when we run to tiously as it could have been. This and inaccurate partisan political at- caused a controversy over the matter serve in this institution. tack. That is a matter of fact. Out- That is why the serious sanction we to arise and last for a substantial pe- siders attempted to influence our ac- riod of time, it disrupted the oper- recommend is appropriate, in my view. tivities, our deliberations, our schedule The gentleman from Georgia [Mr. ations of the House, and it cost the and our conclusions. That is truly a House a substantial amount of money GINGRICH] has recognized his lapses and shame. It has caused harm, not just to the problems they have caused for this in order to determine the facts.’’ the Members involved, but it has also So I urge our colleagues, in light of House. He has apologized, forthrightly brought discredit to this institution, in and sincerely. He has also accepted the all of that, to support the bipartisan my view. recommendation of the committee. unique sanction we proposed, one that Friday, I urged the leadership on includes a clear signal to all Members The $300,000 penalty I believe speaks both sides of the aisle to tone down the eloquently to the American people, about the importance of providing ac- rhetoric, cut the nonsense, and get curate and grounded information to who may not know the weight of one of back to work in repairing the damage our sanctions or another, but they un- the Select Committee on Ethics, that has come to this House. I repeat whether in response to a complaint or derstand $300,000. And I hope that this that exhortation today. money will not come from the Speak- in filing a complaint. With regard to the matter at hand, I I must point out to Members that our er’s political campaign funds, because I am very satisfied with the work done think that will increase the cynicism mission in the preliminary investiga- by our investigative subcommittee, tion was to find and examine the dark of the American people about what whose recommendation was adopted by goes on here in Washington. clouds. That is what investigations do. the full committee and is the rec- Mr. Cole is very good at that. He is a Whether the Speaker remains Speak- ommendation all Members will con- er is up to the Republicans. He is tech- brilliant prosecutor. In his report he sider today. presented well those dark clouds. He nically eligible. I hope you will make a The four of us, working with the ex- judgment as to whether he is ethically did not, however, present all of the traordinarily talented special counsel, other clouds we looked at that turned fit. Jim Cole, functioned in a spirit of bi- Mrs. JOHNSON of Connecticut. Mr. out to be not quite so dark. So I found partisan cooperation that did actually Speaker, I yield such time as he may that his report would be well supple- grow as we went along in the case. I consume to the gentleman from Flor- mented by reading the report of the say we started with different perspec- ida [Mr. GOSS), the chairman of the Speaker’s attorneys for balance, as tives, but we started with open minds, subcommittee, and I want to recognize well. I refer colleagues and interested the outstanding job that he did and I am grateful for the very fine parties to both reports to get the full chairing that subcommittee, as I recog- service, the unbelievable commitment picture. nize the remarkable service of the of time of the members, their coopera- In the end, I agreed with my sub- members of that subcommittee. tion. I take my hat off to the gen- committee colleagues that Mr. GING- (Mr. GOSS asked and was given per- tleman from Maryland [Mr. CARDIN], RICH’s absence of diligence subjects him mission to revise and extend his re- the gentleman from New Mexico [Mr. legitimately to charges of conduct marks.) SCHIFF], and the gentlewoman from reckless enough to constitute a viola- Mr. GOSS. Mr. Speaker, I thank the California [Ms. PELOSI], all of whom in tion of House rules. I sincerely hope gentlewoman from Connecticut, the my view bring great credit to this in- with today’s voting we can put this distinguished chair of our committee, stitution. matter to rest. for yielding me this time. She deserves Contrary to what has been reported, I urge this House to adopt the rec- our sincere gratitude for all she has en- the statement of alleged violations ommendation of the Select Committee dured, for her persistence, for her de- that our subcommittee developed and on Ethics and remember, the penalty is termination to bring this to a success- passed and which forms the basis for aimed at findings in response to the ful conclusion, and here we are today. the sanctioned recommendation did specific work of our subcommittee, no It was certainly an unenviable and, I not, I repeat not, find that Mr. GING- matter what feelings any particular know, thankless task. RICH violated or did not violate tax law Member may personally have about Today we have a conclusion. Today in his relationship with 501(c)(3) tax ex- Mr. GINGRICH. the House takes the final step in what empt organizations. And contrary to Some have said this is a sad day. In- has been a most difficult process, I media reports, that statement of al- deed it is, whenever we have this type think we all would agree. It is not just leged violation of December 21st also of a situation. I will also say it is a day for those intimately involved in the did not charge Mr. GINGRICH with in- of victory. We have proved to the day-to-day twists and turns in this tor- tentionally deceiving our committee American people that no matter how tuous case, but also for the entire with his correspondence in this case. rough the process is, we can police our- House. Nonetheless, I found it extraor- selves. We do know right from wrong in On Friday the full Committee on dinarily imprudent of Mr. GINGRICH not this institution. We can take the nec- Standards of Official Conduct approved to seek and follow a less aggressive essary steps. H178 CONGRESSIONAL RECORD — HOUSE January 21, 1997 Mr. CARDIN. Mr. Speaker, I yield 5 him less effective. I might say that I agree. cial counsel, it was the opinion of the Ethics minutes to the gentleman from Penn- The subcommittee released its statement of Subcommittee, after two years of investigation sylvania [Mr. BORSKI], a very valuable alleged violation on the Saturday before and inquiry, that this matter fell somewhere in member of the Select Committee on Christmas. The counsel's report was released between. As such, both the subcommittee and Ethics, who has done yeoman’s service on Friday afternoon, before inaugural week- the special counsel recommended that the ap- for the House and for the Congress on end, with the vote firmly scheduled for this propriate sanction should be a reprimand and that committee. afternoon. Despite a prior agreement which al- a payment reimbursing the House for some of (Mr. BORSKI asked and was given lowed for a full week of public hearings, we the costs of the investigation in the amount of permission to revise and extend his re- were left with only a single afternoon's ses- $300,000. Mr. GINGRICH has agreed that this marks.) sion. Mr. Cole, along with members of the full is the appropriate sanction, as has the full Eth- Mr. BORSKI. Mr. Speaker, I thank committee and subcommittee were troubled by ics Committee. the gentleman for yielding me this the time line insisted upon by Republican Mr. Speaker, I say to my colleagues, time. leadership. The special counsel insisted with particularly my colleagues on the Mr. Speaker, I want to start by com- consistency that he would be hard pressed to Democratic side of the aisle, this is not mending the members of the investiga- complete a report detailing the 2-year inves- about who should be the Speaker of the tive subcommittee, the gentleman tigation before February 4. Yet, Mr. Cole was House. Democrats have no say in who from Maryland, Mr. BEN CARDIN, the denied the time he deemed necessary. should be the Speaker of the House. gentlewoman from California, Ms. Despite these obstacles, however, the spe- That is up to the majority party. NANCY PELOSI, the chairman, the gen- cial counsel did release a report on Friday This is not about process. There were tleman from Florida, Mr. PORTER GOSS, afternoon which included the subcommittee's parts of this process that I find ex- and, of course, the gentleman from recommended sanction of a reprimand and tremely disturbing, and parts that I New Mexico, Mr. SCHIFF, for the ex- fine. In this report, Mr. Cole, along with Ms. think need to be dealt with further at traordinary job they have performed Roady, the subcommittee's tax expert, and an appropriate time. This is not that for this institution. They are all people two members of the committee conclude that time. of enormously high integrity, and they Mr. GINGRICH has violated the tax code in con- This is not about whether the exist- have done this committee and this junction with 501(c)(3). However, the Commit- ing tax code in question is arcane. I House very proud. tee agreed that the focus of the investigation asked the special counsel, Mr. Cole, at I also want to commend the special should be on the conduct of the Member rath- our Friday afternoon public hearing counsel, Mr. Cole, who under the most er than the resolution of issues of tax law whether the law was in fact arcane, difficult and trying of circumstances which would best be left to the IRS. What the and Mr. Cole responded in the strong- came through with a report that, report does say about the 501(c)(3), is the fol- est possible language that the law was again, I would urge all Members of the lowing: not arcane. In fact, it is a headline House to read; but again, under the ``* * * the subcommittee was faced with a issue that politics and tax-exempt or- most difficult and trying of cir- disturbing choice. Either Mr. GINGRICH did not ganizations should not mix. Even Mr. cumstances, he performed an heroic seek legal advice because he was aware that GINGRICH’s tax attorney agreed with deed for this House. it would not have permitted him to use a that statement. Mr. Speaker, let me state the obvi- 501(c)(3) organization for his projects, or he I also asked the special counsel to re- ous. No Member seeks or enjoys a posi- was reckless in not taking care that, as a spond to the spin that we are all famil- tion on the Ethics Committee, but the Member of Congress, he made sure that his iar with, and it goes like this: ‘‘I saw proper functioning of that committee conduct conformed with the law in an area the course, I watched the tape. There is is essential to the integrity of the where he had ample warning that his intended nothing political about them.’’ Mr. House. It is a matter of personal and course was fraught with legal peril. The sub- Cole’s response was that the issue in institutional honor that each of us has committee decided that regardless of the reso- question was not so much the content agreed to serve. lution of the 501(c)(3) tax question, Mr. GING- of the course, but, rather, the intent I remember distinctly when I re- RICH's conduct in this regard was improper, and the way in which it was distrib- ceived the phone call that any one of did not reflect creditably on the House and uted. us never wants to get; a leader of my was deserving of sanction.'' The report states, ‘‘Mr. GINGRICH ap- party, Speaker Tom Foley, asked me to With respect to the letters containing inac- plied the ideas of the course to partisan serve on the Ethics Committee. I re- curate information that Mr. GINGRICH provided political purposes.’’ Mr. Speaker, this member distinctly saying to Mr. Foley to the committee, the report goes on to say: is not about determining the innocence that I was reminded of the fellow who ``The special counsel suggested that a good or the guilt of Mr. GINGRICH. He has al- was tarred and feathered, put on a rail argument could be made, based on the ready admitted that guilt, that he has and run out of town, whose retort was record, that Mr. GINGRICH did act intentionally, brought discredit to this House. This is that if it weren’t for the honor, he however it would be difficult to establish that about the ability of the House of Rep- would rather walk. I am on this com- with a high degree of certainty * * * In deter- resentatives, under the most trying of mittee, but it is as a reluctant mem- mining what the appropriate sanction should circumstances, to judge one of its own ber. On more than one occasion I have be in this matter, the subcommittee and the Members, an extremely controversial offered to step down when the removal special counsel considered the seriousness of Member, one who has led his party to of a member was necessary to maintain the conduct, the level of care exercised by Mr. the majority. It is our duty to deter- the political balance of the committee. GINGRICH, the disruption caused to the House mine the appropriate sanction to that But Mr. Speaker, I feel very strongly by the conduct, the cost to the House in hav- Member. that it is our constitutional duty, and ing to pay for an extensive investigation, and The subcommittee, aided by the spe- it was mine, to respond positively to the repetitive nature of the conduct.'' cial counsel, has conducted an inves- Tom Foley’s request. It was, again, cer- ``The subcommittee was faced with troubling tigation and made its recommendation tainly not a position that I wanted. choices in each of the areas covered by the to the full committee, which in turn I hope to concentrate my efforts and statement of alleged violation. Either Mr. GING- has made that recommendation to the energies on the work of the Committee RICH's conduct in regard to the 501(c)(3) orga- full House. on Transportation and Infrastructure, nizations and the letters he submitted to the Those are the processes we have adopted probably the most bipartisan commit- committee was intentional or it was reckless. and those are the processes we have fol- tee in this House of Representatives, Neither choice reflects creditably on the lowed. We are giving every Member, inde- and where that bipartisan atmosphere House. * * *'' pendently, the opportunity to put aside par- has enabled us to turn out very impor- Under the rules of the committee, a rep- tisan politics and follow the recommendation tant pieces of legislation. rimand is the appropriate sanction for a seri- offered by the special counsel, the subcommit- It is always a grueling and distasteful task to ous violation of House Rules and a censure is tee, and the full committee upon completion of investigate a fellow MemberÐall the more so appropriate for a more serious violation of a 2-year inquiry. It is right and it is just. We in the case of the Speaker. Some have sug- House rules. This is the extent to which guide- were asked as Members of Congress to put gested that partisan attempts were made to lines are in place for Members to make a de- aside our partisan beliefs and serve on this derail the special counsel's efforts and render termination of sanction. According to the spe- committee out of a sense of duty and honor. January 21, 1997 CONGRESSIONAL RECORD — HOUSE H179 Now, we are asking you to honor our rec- science, and vote against a penalty Let there be no mistake, Respondent has ommendations with dignity. that we know is too severe. accepted the Investigative Subcommittee’s I ask my colleagues to honor the The report of counsel and article fol- Statement of Alleged Violation. In doing so, work of the Ethics Committee and to low: Respondent has accepted the facts contained therein. This does not mean, however, that IN THE MATTER OF SPEAKER NEWT vote yes for this very strict sanction. Respondent accepts as true those asserted GINGRICH Mrs. JOHNSON of Connecticut. Mr. facts not contained in the Statement of Al- Speaker, I yield 3 minutes to the gen- COMMITTEE ON STANDARDS OF OFFICIAL CON- leged Violation. To assist the Committee in tleman from Texas [Mr. SMITH]. DUCT: REPORT OF COUNSEL FOR THE RE- its decision-making process, attached hereto (Mr. SMITH of Texas asked and was SPONDENT as Appendix A is a timeline of the events re- given permission to revise and extend This is the Report of Counsel for the Re- lating to the Renewing American Civiliza- his remarks.) spondent Speaker Newt Gingrich. This Re- tion course. This Report is submitted to port is being submitted in connection with place the general body of facts in the context Mr. SMITH of Texas. Mr. Speaker, I the Sanction Hearing specified in Rule 20 of thank the chair of the Ethics Commit- of reality as opposed to a version of the facts the Rules of the Committee on Standards of viewed with hindsight that could only exist tee for yielding time to me. Official Conduct (‘‘Rules’’) regarding written in a laboratory free from the dynamics of the Let me say at the outset that you submissions by counsel.1 The Report is sub- real world. For assistance in placing the can clearly disagree and have great reject to two limitations. First, the Report has facts in context, please see Appendix B. spect for your colleagues on the Ethics been prepared without the access to all of the information collected by the Investiga- SCOPE OF HEARING Committee, as I do, and still reach dif- There have been a myriad of charges and ferent conclusions, as I do. tive Subcommittee. Respondent was limited to certain exhibits made available by the allegations made against Respondent. With My conclusion is that the penalty Committee; selected transcripts made avail- the exception of the single violation con- that has been assessed by the Ethics able by the Committee; and public docu- tained in the Statement of Alleged Viola- Committee is way too severe when you ments. Second, Respondent has not been af- tion, those charges and allegations are un- look at the actual findings of the com- forded the opportunity to conduct discovery true and groundless. The only violation be- mittee and when you look at the prece- or otherwise develop information relating to fore this Committee for purposes of deter- dent that has been established by this the matter before the Committee. mining the appropriate sanction, if any, is OVERVIEW the violation contained in the Statement of House. Alleged Violation. The Statement of Alleged Let us look at the actual findings. On December 21, 1996, the Investigative Subcommittee issued a Statement of Alleged Violation describes conduct which violates There have been two here. The first Rule 43(1) of the Rules of the Committee on finding is that the Speaker should have Violation. The Statement was the product of an investigation by the Investigative Sub- Standards of Official Conduct. Rule 43(1) pro- consulted an attorney about tax laws. committee and Special Counsel. It is impor- vides as follows: ‘‘A Member, officer, or em- The second is that he submitted two tant to note that the process was one-sided: ployee of the House of Representatives shall inaccurate letters to the Ethics Com- Witnesses were not subject to cross-examina- conduct himself at all times in a manner mittee. These are real mistakes, but tion; documents were not subject to which shall reflect creditably on the House they should not be hanging offenses, pertinency or admissibility standards; and of Representatives.’’ Rules of the Committee traditional rules establishing standards for on Standards of Official Conduct, Rule 43, especially when we consider that there clause 1. was no finding of any law that was bro- admissibility, pertinency and reliability of evidence were not applied. Respondent was Paragraph 52 of the Statement of Alleged ken, there was no finding of any intent not permitted to participate in the examina- Violation contains the only violation found, to mislead the Ethics Committee, and tion of witnesses or documents. and states that: there was no finding that the Speaker Also on December 21, 1996, Respondent sub- ‘‘[R]egardless of the resolution of whether received any personal financial gain. mitted an Answer admitting the alleged vio- the activities described in paragraphs 2 The special counsel to the Ethics lation. Pursuant to Rule 19(c) of the Rules, through 41 constitute a violation of section Committee once described it this way. Respondent’s admission relieved the Com- 501(c)(3) of the Internal Revenue Code, by failing to seek and follow legal advice described He said that the Speaker had ‘‘run mittee of determining through an adjudica- tory subcommittee at a Disciplinary Hearing in paragraphs 15 and 40, Mr. Gingrich failed to some very yellow lights.’’ But you do whether the single count in the Statement of take appropriate steps to ensure that the activi- not get ticketed, or you should not, for Alleged Violation was proven by clear and ties described in paragraphs 2 through 41 were running a very yellow light, no matter convincing evidence. At such a Disciplinary in accordance with section 501(c)(3) of the In- how close it is to becoming a red one. Hearing, Respondent would have been af- ternal Revenue Code; and on or about March If we look at the precedents that forded the opportunity to cross-examine wit- 27, 1995, and on or about December 8, 1994, in- have been established here as well, we nesses, challenge documents and obtain dis- formation was transmitted to the Committee by see that there is no justification for covery. and on behalf of Mr. Gingrich that was material With the Statement of Alleged Violation to matters under consideration by the Commit- this severe a penalty. The Ethics Com- and the Answer, the next process con- tee, which information, as Mr. Gingrich should mittee staff has researched this issue, templated by the Rules is a Sanction Hear- have known, was inaccurate, incomplete, and and there is simply not a single case ing pursuant to Rule 20. This process does unreliable.’’ Statement of Alleged Violation, where there has not been a finding of not entail a trial on the merits of the alleged ¶ 52, p. 22 (emphasis added). an intent to mislead the committee violation. Instead, the process is limited to The standard relating to the adoption of a that has resulted in a penalty of rep- determining the appropriate sanction, if any, Statement is contained in Rule 17(d) of the for the violation. Rules of the Committee on Standards of Offi- rimand, not a single case. This Report is submitted for that purpose. In fact, all of the precedents are to cial Conduct and provides: This is not a report in response to the Spe- ‘‘Upon completion to the Preliminary In- the contrary. Wherever there has not cial Counsel’s Report. It does not contain a quiry, an investigative subcommittee, by been a finding of intent to mislead the fact by fact, argument by argument response majority vote of its members, may adopt a committee, the penalty has always to the Special Counsel’s Report. Respondent Statement of Alleged Violation if it deter- been either a Letter of Reproval, or the does not accept as true the asserted factual mines that there is reason to believe that a case has been dismissed against the in- statements and characterizations thereof be- violation has occurred.’’ (emphasis added). dividual involved. yond the facts contained in the Statement of Rules of the Committee on Standards of Offi- Alleged Violation admitted by Respondent’s cial Conduct, Rule 17(d). I might say here, we all know that Answer. It is relatively easy for an attorney, the Speaker has agreed to the pen- Given the false information which has been such as the Special Counsel, to piece to- disseminated regarding the violation, it is alties, but that does not mean that the gether testimony and documents, free from important to note that the Investigative agreement is a fair one. It does not the tests of cross-examination, hearsay lim- Subcommittee: mean that that is a penalty that we its and other evidentiary standards to assure did not charge Respondent with any viola- have to support. accuracy, and free from the boundaries of re- tion of U.S. tax law; Remember the speech by Teddy Roo- ality, to reach virtually any conclusion did not charge Respondent with intending sevelt called the man in the arena through clinical forensic reconstruction. The to deceive the Committee; Report is designed to put the facts before the did not charge Respondent with illegal ac- speech. He said that we can either Committee in the context of the real world grapple in the political arena, or we tivities or criminal tax violations; and so that the Committee can determine the ap- did not charge Respondent with money can be one of those ‘‘timid souls who propriate sanction, if any, for the violation, laundering. know neither victory nor defeat.’’ in the absence of an adversary process. Indeed, based on the standard applied by How much better it would be for us the Investigative Subcommittee, there is no today to have the victory of con- 1 Footnotes at end of document. reason to believe that any such allegations H180 CONGRESSIONAL RECORD — HOUSE January 21, 1997 are true. All statements to the contrary are serve the environment can count on our sup- into an opportunity society to help people not only false, but maliciously false, as es- port—in the form of endorsements, contribu- achieve productivity, responsibility and safe- tablished by the language of the Statement tions, publicity, and volunteer support. Can- ty so they can achieve prosperity and free- of Alleged Violation. didates who try to deceive the public by sup- dom so they can pursue happiness.’’ GDC THE REAL WORLD porting efforts to eliminate or weaken our 11363; HAN 2123. basic environment safeguards will be called Respondent further described the move- In the real world, Members of Congress ment as follows: ‘‘The challenge is not Re- necessarily confront many issues incidental to account for their actions. In 1996, concerned citizens have the opportunity to republican or Democrat, liberal or conserv- to their multiple responsibilities. Chapter 9 ative. The challenge is to our civilization’s of the House Ethics Manual itself addresses verse the tide of the last election. We have no choice, as the 21st century nears, but to survival.’’ GDC 1066; see also, GDC 10729. ‘‘Involvement With Official and Unofficial Jeffrey Eisenach, Project Director for the Organizations.’’ On page 307, the House Eth- send to Washington elected officials who have a genuine commitment to preserving Renewing American Civilization course, de- ics Manual state: ‘‘Members and employees scribed the movement as follows: ‘‘The po- and protecting the Earth. With your help, of the House need to distinguish carefully be- tential movement to renew American civili- the 1996 elections can set a new course for tween official and unofficial activities when zation and replace the welfare state is bigger our nation.’’ See Exhibit C for other similar they interact with private organizations.’’ than and in some ways different from the Re- home pages involving multiple entity orga- Also in the real world, Members interact publican Party.’’ Eisenach 2767. with a variety of organizations. Some are po- nizations with tax exempt affiliates. When questioned by Special Counsel, Re- litical action committees; some are chari- RENEWING AMERICAN CIVILIZATION MOVEMENT spondent states as follows: table organizations (Section 501(c)(3) enti- The movement to renew American civiliza- Q: ‘‘Is that [the movement] to be con- ties); and others are lobbying organizations tion had its genesis in Respondent’s belief ducted in a political framework? (Section 501(c)(4) entities.2 It is neither ille- that American civilization is decaying and A: ‘‘There is a political framework within gal nor inappropriate for Members to partici- must be renewed. Respondent believes that the movement. The movement itself is cul- pate as directors, officers or trustees of these the act of renewing American civilization in- tural, not political. Q: ‘‘Is the movement intended to be Repub- political action committees, charitable orga- volves far more than politics, politicians and lican identified? nizations and lobbying organizations. Ac- votes. It involves what is being taught in A: ‘‘No.’’ Gingrich July 17, 1996 Tr., p. 28. cording to The Exempt Organization Tax Re- local schools and colleges, what is heard on When Respondent was asked by Special view, ‘‘a review of Members’ 1988 financial radio and television and what happens in Counsel whether the goal of the movement disclosure forms . . . showed that 51 Sen- local clubs and organizations, in addition to was to recruit a Republican majority, he an- ators and 146 House Members were founders, what government and politicians are doing. swered as follows: officers or directors of tax-exempt organiza- Respondent believes that the renewal must A: ‘‘No. Just the reverse. That is the move- tions.’’ See, Exhibit A: The Exempt Organi- be cultural, societal, educational, economic, ment is large. You might or might not have zation Tax Review, Dec.–Jan. 1990, p. 680. In- governmental and political. More impor- a Republican majority within this move- deed, ‘‘five candidates in the 1988 presi- tantly, to achieve the degree of change nec- ment. If the movement succeeded without a dential contest had tax-exempt groups osten- essary to renew American civilization, there Republican majority, that would still be a sibly doing research and educational activi- would have to be a movement that tran- success. We thought, the times we talked ties in the months preceding their cam- scends any single vehicle of change. this out, the Republican majority was the paigns.’’ Id. Looking toward the 21st Century, Respond- most logical step in this country—— The Internal Revenue Service specifically ent developed an approach which he referred Q: ‘‘I understand that it may not result, contemplated such structures. As described to as the ‘‘five pillars’’ of renewing American but was it a goal? by the IRS: civilization: (1) quality; (2) technological ad- A: ‘‘It was a not a goal of this movement. ‘‘A number of IRC 501(c)(3) organizations vancement; (3) entrepreneurial free enter- It was a goal of my activities.’’ Gingrich have related IRC 501(c)(4) organizations that prise; (4) principles of American civilization; July 17, 1996 tr., pp. 49–50. conduct political campaign activities, usu- and (5) psychological strength. Based on It is against that backdrop that Respond- ally through a PAC (an IRC 527(f) separate these principles, Respondent sought to initi- ent and his advisors conceived of the Renew- segregated fund). So long as the organiza- ate a movement to replace the welfare state ing American Civilization course, one of sev- tions are kept separate (with appropriate and renew American civilization to occur at eral tools to be utilized in initiating this movement. See Exhibit D: chart illustrating, record keeping and fair market reimburse- every level of American society. Renewal in part, the dynamics of initiating the movement for facilities and services), the activi- would require the accomplishment of various ment. ties of the IRC 501(c)(4) organizations or of goals including the education of the general the PAC will not jeopardize the IRC 501(c)(3) population and creation of a majority of citi- THE RENEWING AMERICAN CIVILIZATION COURSE organization’s exempt status. 1992 IRS CPE, zens committed to reform, thereby spawning The Renewing American Civilization at 439.’’ activism; education of business leaders; and course was offered for academic credit at In addition, it is not unusual that the po- education of the media as to the ideals and over 20 colleges and universities across the litical action committees, charitable organi- concepts of renewal. In effect, Respondent United States, including the University at zations and lobbying organizations share the sought to create a national dialogue for re- Berkeley, Vanderbilt University, Clemson same address and operate out of the same of- form and a methodology by which citizen ac- University, Emory University, the Univer- fices. For example, the National Organiza- tivists could accomplish the stated goals of sity of Mississippi, Kansas State University, tion of Women (a section 501(c)(4)), National the movement. Colgate University, Auburn University, the Organization of Women Foundation Inc. (a Respondent envisioned many methods to University of South Carolina and Penn State section 501(c)(3)), and the National Organiza- initiate the movement through simultaneous University. FIC 00108; FIC 00148–49. The basic format of the Renewing Amer- tion of Women Political Action Committee efforts utilizing Respondent’s various public ican Civilization course consisted of ten lec- (a political action committee) all list as roles. First, as a Member of Congress and a ture topics, discussing various aspects of re- their address 1000 16th St. NW 700, Washing- member of the Republican leadership. Re- newing American civilization. Some key ele- ton, D.C. For a further listing of multiple, spondent envisioned utilizing the legislative ments of those ten lectures can be summa- affiliated Political Action Committees/Sec- process through speeches, such as special or- rized as follows: tion 501(c)(3) entities/Section 501(c)(4) enti- ders presented to the House, votes and legis- 1. ‘‘Understanding American Civiliza- ties sharing the same address, see Exhibit B lation. Second, as an educator, Respondent tion’’—America is the only country in a posi- and Appendix D. envisioned refinement of his message and de- tion to lead the world into a new age, and Finally, it is common for these multiple- livering it to foster healthy debate on the is- must strive to replace its welfare state with entity organizations to engage simulta- sues of reform. Third, as Chairman of an opportunity society, based on the five neously in activities that have political im- GOPAC, Respondent envisioned recruiting principles of American civilization: personal plications. For example, the Sierra Club op- and training Republican candidates. Re- strength, entrepreneurial free enterprise, the erates a section 501(c)(3) entity designated as spondent believes that every citizen, regard- spirit of invention and discovery, quality and Sierra Club Fund; a section 501(c)(4) entity less of partisan affiliation, should partici- the lessons of American history. designated as Sierra Club; a political action pate in the renewal, and that, through edu- 2. ‘‘Personal Strength’’—Personal strength committee designated as Sierra Club Com- cation in the principles of civilization, de- is a basic principal of American civilization mittee on Political Education; and a section bate will ensue and every citizen can become vital to establishing safety, family, work, 501(c)(3) entity designated as Sierra Club a pro-civilization activist to ensure that health and learning. Existing frameworks Legal Defense Fund. All of the entities list American civilization can be renewed. weaken personal strength by discouraging as their address 730 Polk Street, San Fran- During a December, 1992 meeting with work, undermining family and integrity and cisco, CA. The internet home page of Sierra GOPAC contributor Owen Roberts, Respond- discouraging self-reliance. Club reflects its broad-ranging purposes, in- ent described the movement as 3. ‘‘Entrepreneurial Free Enterprise’’—The cluding those which are political. The home ‘‘articulat[ing] the vision of civilizing hu- role of the entrepreneur is vital to American page states as follows: manity and recivilizing all Americans.’’ GDC civilization. Bureaucratic credentialism sti- ‘‘The Sierra Club has played an increas- 11363. He sought to: ‘‘[d]efine, plan and begin fles entrepreneurial free enterprise, and gov- ingly active role in elections in recent years. to organize the movement for civilization ernment regulation distorts the market’s Candidates who can be counted on to pre- and the effort to transform the welfare state ability to reinforce success. January 21, 1997 CONGRESSIONAL RECORD — HOUSE H181 4. ‘‘Spirit of Invention and Discovery’’— coming his injuries in Vietnam; Congress- ate a dynamic forum for these inter- The welfare state cripples progress through man John Lewis about the role of personal changes.’’ July 28, 1993 Memo from Mescon to bureaucracy, litigation and taxation. A pro- strength in the civil rights movement; Na- Faculty Colleagues, FIC 00185. spirit of invention and discovery America tionally-recognized teacher Marva Collins on Many of the students who took the Renew- will create a better future through better teaching personal strength; Supreme Court ing American Civilization course for aca- ideas. Justice Clarence Thomas’ journey from Pin- demic credit at Reinhardt College, one of the 5. ‘‘Quality and Deming’s Profound Knowl- point, Georgia to the Supreme Court; and A host sites, were highly enthusiastic about edge’’—With a culture of quality, Americans story about the Paralympics. GDC 2619. the course and regarded it as one of the most can compete against anyone in the world. During the course, Respondent also promi- challenging classes of their college careers. Consumers define value. To improve results, nently featured Franklin D. Roosevelt, John See Reinhardt College Student Evaluation you must improve the process that generates F. Kennedy, Rev. Martin Luther King, Jr. Forms, GDC 12454–12546. Some students them. People want to do a good job. Every and Jimmy Carter in his discussions and vid- viewed Renewing American Civilization as person is part of a larger system. Continual eotape presentations. Respondent discussed an excellent course for people with a ‘‘true learning is the basis for continual improve- both Democrats and Republicans favorably. interest in history,’’ while other students ment. In developing the Renewing American Civ- saw it as ‘‘really a business course.’’ Id. at 6. ‘‘Lessons of American History’’—History ilization course, Respondent invited Mem- 12472. Another student commented, ‘‘I really is a collective memory and a resource to be bers of Congress from both parties to con- was ready to argue political points, but I’m learned from and used. America is excep- tribute ideas to the course. WGC 07084. Prior glad that [Respondent] stayed away from tional and its history teaches us how excep- to the time Respondent taught the course, those.’’ Id. One student was ‘‘disappointed’’ tional. The religious and social tenets of pu- he described his course development to the because he or she did not ‘‘learn more about ritanism are diffused throughout American Committee as follows: politics.’’ Id. at 12499. Another student wrote, values today. ‘‘I expect that we will invite many people ‘‘this has not been political grandstanding.’’ 7. ‘‘Economic Growth & Job Creation’’— to comment on the content of the course, at Id. at 12517. One student wrote, ‘‘it had no The welfare state’s despised low-paying job every stage of the four-year process. Com- politics whatsoever.’’ Id. at 12487. is the entrepreneur’s opportunity. It is not mentators will include people involved in Although the Renewing American Civiliza- who you are today, it is who you want to be state and local government, including Con- tion course was promoted among a wide tomorrow that counts in America. A success- gressional staff (my own and others). These array of Republican organizations, non-par- ful America will have the highest value commentators will also include members of tisan or Democratic-oriented organizations added jobs with the greatest productivity both major political parties. (For example, I were also solicited, including the American leading to the greatest take home pay and have recently talked with both Pat Moy- Political Science Association. Of the 36 con- the greatest job security. nihan and John Lewis, who have agreed to tributors to the course, only 14 were associ- 8. ‘‘Health and Wellness’’—Our challenge is serve in this capacity.)’’ Gingrich July 21, ated with GOPAC or its efforts. GDC 2621. to create a vision of a healthy American fo- 1993 letter to Rep. McDermott. Respondent only mentioned four of the 36 cusing on lower costs, higher quality, more Respondent later described his course de- contributors in the course lectures. choices and greater access. The five prin- velopment as follows: One course memorandum reflected Re- ciples of American civilization should help ‘‘I have invited many people in many back- spondent’s firm desire to maintain the us brainstorm a better way of life. grounds to submit material for consideration course as a non-partisan, apolitical endeav- 9. ‘‘Saving the Inner City’’—American re- and to assist in reviewing the course. These or, stating as follows: form movements have emerged quickly and include President Clinton and Secretary of ‘‘Obviously, we also need to design a proc- have had powerful impacts. Saving the inner Labor Robert Reich.’’ Gingrich September 7, ess which is legally appropriate and as im- city can be accomplished through individual, 1993 letter to Barry Phillips, Chairman of the mune as possible from criticism from those decentralized efforts. The vicious circle of Georgia Board of Regents, GDC 2607. who oppose what we are doing. In particular, the welfare state should be replaced with the Several prominent scholars reviewed the we need to ensure that Kennesaw State Col- virtuous circle of American civilization to content of the Renewing American Civiliza- lege and Kennesaw State College Foundation help people create new hope and new oppor- tion course. David King, an assistant profes- resources are not used to help partisan orga- tunities. sor of public policy at Harvard University’s nizations (e.g., GOPAC) or political can- 10. ‘‘Citizenship for the 21st Century’’— John F. Kennedy School of Government, con- didates (e.g., Newt).’’ Aug. 25, 1993 Eisenach Citizenship may be defined as the duties and cluded that the course is ‘‘not partisan. . . . Memorandum, WGC 07080. obligations, rights and responsibilities nec- It touts conservative ideas, but those ideas Much has been written regarding GOPAC’s essary to maintain community. The genius are never explicitly linked to the Republican involvement in the Renewing American Civ- of America lies in liberating each citizen to Party.’’ Peter Applebome, ‘‘Educators Di- ilization course. The critical inquiry in this seek community and define citizenship in vided on Course by Gingrich,’’ New York regard is whether the Respondent took steps the broadest possible way. Times, Feb. 20, 1995 at A12. Professor King to maintain the division of capacities be- These lectures would also include a list of also concluded it is impossible to teach a po- tween his capacities as a Member, a teacher suggested readings to allow for a more com- litical science or history course ‘‘without in a section 501(c)(3) setting and a partisan plete explanation of the issues covered. someone interpreting what you say in par- politician in connection with a political ac- These readings included works written by tisan terms.’’ Kathy Alexander, ‘‘Gingrich’s tion committee. Whether those efforts were Democrats such as Al Gore and Max Cleland, Notorious Course at End: For Now Students completely successful necessarily depended as well as works by Alvin Toffler, a Futurist. Praise Teachings and Teacher as he Takes on others. The Respondent’s activities, how- During each class section, Respondent would Two-Year Break,’’ Atlanta Journal-Constitu- ever, reflect that he attempted repeatedly to lecture for his two-hour period and the fac- tion, Mar. 11, 1995, at C1. ensure that his partisan and non-partisan ac- ulty representative or site representative The vast majority of those persons who at- tivities were properly segregated. would then make a presentation involving tended the course, or were otherwise associ- For example, as reflected in the February group discussion which Respondent did not ated with the course, found it to be academic 15, 1993 Agenda to a GOPAC planning session, control. and non-partisan. For instance, Dr. Tim Respondent viewed the Renewing American Respondent himself was, prior to election Mescon, dean of the business school at Ken- Civilization course as separate and apart to Congress in 1978, a professor of history nesaw State College where the course was from GOPAC. On the agenda, item I. is ‘‘Gen- who served on the faculty of West Georgia first taught, characterized the philosophical eral Planning/Renewing American Civiliza- College for eight years. He was awarded a approach of the Renewing American Civiliza- tion’’ and item II. is ‘‘Political/GOPAC Is- B.A. from Emory University in 1965 and a tion course as follows: sues.’’ JR 645. Ph.D. in European History from Tulane Uni- ‘‘This course . . . is by no means con- Finally, Nancy Desmond, the Renewing versity in 1971. structed as a political platform or forum for American Civilization Course Coordinator, The course itself was taught at Kennesaw unidimensional ideologies. . . . Today, citi- stated Respondent’s position succinctly State College, a senior college within the zens of the United States are immersed in when she wrote to Barry Hutchison of University System of Georgia, and, later, at conversations pertaining to reform. . . . Re- Friends of Newt Gingrich (‘‘FONG’’) on July Reinhardt College, a private, accredited col- gardless of political philosophies, this coun- 11, 1993: lege located in Waleska, Georgia. try is engaged in lively debate over the need ‘‘In a recent conversation with Newt, he Periodically during course lectures, Re- to reform and the methodology required to expressed the concern that my involvement spondent made references to individuals, en- implement change. This course has been de- in both the Congressional Club and the Re- tities and companies which in their own way signed by contributors from various political newing American Civilization course at Ken- exemplified his notion of American platforms, socioeconomic backgrounds, and nesaw might suggest to some that there is a exceptionalism. A total of 46 videotape in- academic and professional institutions. The possible connection between the course and serts—typically three to four minutes in intention is to incubate dialogue, discourse the campaign. As you know, Newt is ada- length—were used in the course to illustrate and discussion all focused on renewing Amer- mant about keeping the two separate and various points. GDC 2619. The inserts from ican civilization. . . . Kennesaw State stu- wants it to be clear to everyone that the the ‘‘Personal Strength’’ lesson are typical dents should be encouraged to participate in course is, in no way, connected to his politi- of these: Former Georgia Secretary of State pensive discussions on such timely issues, cal campaign. The firmness of this resolve on and now U.S. Senator Max Cleland on over- and it is my intention that this course cre- his part and the absolute commitment to H182 CONGRESSIONAL RECORD — HOUSE January 21, 1997 maintaining a clear and unequivocal separa- clear answer, there could be no knowing vio- tions: Hearings before the Subcommittee on tion between the course and his campaign lation of law. Oversight of the House Committee on Ways leave me no alternative but to withdraw Although there appears to be no precedent and Means, 100th Cong., 1st Sess. 19–20, 423 from my volunteer post with the Club.’’ PFF for it,4 the issue then becomes whether there (1987) (Statements of Bruce Hopkins, Baker 38289. is a violation when a Member is actually & Hostetler and the United States Catholic Two tax-exempt organizations, Kennesaw aware that the law is unsettled, but nonethe- Conference). In offering the amendment, State College Foundation (‘‘KSCF’’) and less proceeds with the activity with knowl- Senator Johnson stated that the purpose of Progress & Freedom Foundation (‘‘PFF’’), edge that a public controversy may ensue, the amendment was to ‘‘den[y] tax exempt collected the funding for the Renewing resulting in discredit to the House of Rep- status to not only those people who influ- American Civilization course at Kennesaw resentatives. In this case, the hindsight con- ence legislation but also to those who inter- State College and Reinhardt College, respec- clusions of the tax counsel who appeared be- vene in any public campaign on behalf of any tively. Regarding KSCF, Respondent taught fore the Investigative Subcommittee are candidate for any public office.’’ 100 Cong. the course at Kennesaw. The KSCF was the that any counsel presented with the facts al- Rec. 9604 (1954). leged in the Statement of Alleged Violation funding repository for activities at the Ken- Section 1.501(c)(3)–1 of the Income Tax Reg- ‘‘would have advised that it not be conducted nesaw campus, and it existed before Re- ulations (‘‘the Regulations’’) marked a re- under the auspices of an organization exempt spondent had any relationship to the college. treat from the ‘‘exclusively for’’ language of from taxation under section 501(c)(3) of the In relation to PFF, Jeffrey Eisenach de- section 501(c)(3) by providing that ‘‘[a]n orga- Internal Revenue Code.’’ (S.A.V., T 15,40). scribed Respondent’s lack of involvement nization will be regarded as ‘operated exclu- After two years of public controversy driven with PFF as follows in his Attachment to his sively’ for one or more exempt purposes only largely by interests totally unrelated to the 1995 Statement: if it engages primarily in activities which ‘‘[Respondent] is not and has never been a tax-exempt status of the organizations, the accomplish one or more of such exempt pur- board member, officer or employee of the tax attorney’s position is a relatively obvi- poses specified in section 501(c)(3). An orga- foundation. He was not aware of plans to cre- ous conclusion for attorneys operating with nization will not be so regarded if more than ate the foundation until after they were well the benefit of hindsight. Respondent’s con- an insubstantial part of its activities is not advanced; did not participate in key plan- duct must, however, be evaluated in the real in furtherance of an exempt purpose.’’ 26 ning meeting leading to its creation; has world, real time context of what was the C.F.R. 1.501(c)(3)–1(c)(1). Thus, contrary to never served in any official capacity with the generally accepted practice in 1993 when the the language of section 501(c)(3), the IRS has Foundation; did not review or participate in course was established. indicated that conduct not consistent with the development of its application to the IRS THE USE OF CHARITABLE FUNDS IN SUPPORT OF articulated exempt purposes will not jeop- for tax exempt status or other key founding NONPARTISAN POLITICAL EDUCATION WAS AN ardize exempt status as long as such conduct documents; did not participate in the selec- ACCEPTED PRACTICE IN 1992 AND 1993 constitutes only an ‘‘insubstantial part’’ of tion of or make recommendations for mem- First, the Respondent’s activities were not its overall activities. Id. bership on its founding board of directors; inconsistent with clear federal tax law in the The Regulations further provide that an was not consulted on the naming of new opinion of all tax practitioners at the rel- entity will not be regarded as being operated board members; has not, with the exception evant time. The practice in the real world at exclusively for exempt purposes if it satisfies of his Renewing American Civilization the time was that the conduct engaged in by the IRS’ definition of an ‘‘action’’ organiza- project, participated in fundraising activi- Respondent was in accord with the conduct tion. 26 C.F.R. 1.501(c)(3)–1(c)(3). An ‘‘action’’ ties; and, he has always understood the of many well-advised contemporary chari- organization is defined as one that devotes Foundation to be an independent entity, cre- table educational entities, the comment of ‘‘a substantial part of its activities [to] at- ated for the non-partisan research and edu- legal scholars, and the practice of other tempting to influence legislation by propa- cational purposes stated in its application Members of Congress. for tax exempt status and subsequent IRS Nonprofit organizations, to qualify for tax ganda or otherwise.’’ 26 C.F.R. 1.501(c)(3)– filings.’’ GDC 12176. exempt status, must satisfy the basic cri- 1(c)(3)(ii). Likewise, ‘‘[a]n organization is an ‘action’ organization if it participates or in- ‘‘FAILING TO SEEK AND FOLLOW LEGAL ADVICE’’ teria established by section 501(c)(3) of the Internal Revenue Code (‘‘IRC’’ or ‘‘the tervenes, directly or indirectly, in any polit- The Statement of Alleged Violation alleges ical campaign on behalf of or in opposition that, ‘‘by failing to seek and follow the legal Code’’), regulations promulgated thereunder, judicial interpretation of the law and its reg- to any candidate for public office.’’ 26 C.F.R. advice’’ or tax counsel to ensure that the ac- 1.501(c)(3)–1(c)(3)(iii). tivities described in the Statement of Al- ulations, Internal Revenue Service (‘‘IRS’’) leged Violation ‘‘were in accordance with Revenue Rulings, IRS Letter Rulings, tax APPLICATION OF REVENUE RULINGS APPLYING section 501(c)(3) of the Internal Revenue notices, and the various other means such as 501(c)(3) AND ITS REGULATIONS Code’’, Respondent’s conduct constituted a IRS press releases and announcements by violation of Rule 43(1) of the Rules of the which citizens can attempt to anticipate IRS In 1978, the IRS issued a Revenue Ruling United States House of Representatives. interpretation of their conduct under the revoking a prior such ruling to hold that ‘‘[c]ertain ‘voter education’ activities con- (S.A.V., T 52–53). It is important to note that, law. contrary to the statements of some, the In- SECTION 501(c)(3) AND THE REGULATIONS ducted in a nonpartisan manner by an orga- vestigative Subcommittee did not find that PROMULGATED THEREUNDER nization recognized as exempt under section 501(c)(3) of the Code will not constitute pro- Respondent’s activities violated federal tax In essence, section 501(c)(3) of the Internal hibited political activity disqualifying the law or caused the tax-exempt organizations Revenue Code provides that entities must organization from exemption.’’ Rev. Rul. 78– to violate their tax exempt status. The fact satisfy several basic criteria to qualify for 248, 1978–1 C.B. 154. According to the IRS rul- is that a violation of law may not, in and of exempt status. First, the entity must be ‘‘or- ing, the determination of whether an organi- itself, be a violation of the Code of Official ganized and operated exclusively for’’ one or zation is participating or intervening in a Conduct. As noted on page 12 of the Ethics more of several enumerated charitable, reli- political campaign as proscribed by regula- Manual, ‘‘[d]uring the floor debate preceding gious or educational purposes,5 second, ‘‘no tion 1.501(c)(3)–1(c)(3)(iii) ‘‘depends upon all the adoption of the Code, Representative part’’ of the net earnings of the entity may of the facts and circumstances of each case.’’ Price of Illinois, Chairman of the Select inure to the benefit of any private share- Id. Revenue Ruling 78–248 then sets forth Committee on Standards of Official Conduct, holder or individual; third, ‘‘no substantial four hypothetical ‘‘situations’’ describing ac- rejected the notion that violations of the law part of the activities’’ of that entity may be tivities which the IRS deemed to be either are simultaneous violations of the ‘‘carrying on propaganda, or otherwise at- permitted or prohibited under 501(c)(3). Ulti- Code . . .’’ tempting to influence legislation’’; and mately, the factual analysis provided by the Certainly, a knowing violation of law could fourth, the entity must not ‘‘participate in, IRS with respect to each situation was constitute conduct that did not reflect or intervene in . . ., any political campaign whether, under the specific facts of the hypo- creditably on the House of Representatives on behalf of (or in opposition to) any can- thetical, the activities ‘‘evidenced a bias or in violation of Rule 43(1). Here, there has didate for public office.’’ IRC § 501(c)(3). been no finding of a knowing violation of The legislative history of the campaign preference’’ with respect to the views of the law.3 In fact, such a finding would be directly intervention rule reflects the difficulties entity towards issues, a candidate or a group contradicted by the findings in the State- practitioners have encountered in applying of candidates. Id. ment of Alleged Violation itself. these provisions. This provision of the Code Two years later, the IRS applied Revenue The Statement of Alleged Violation notes was added to the federal tax law when then- Ruling 78–248 to conclude that an entity’s that tax counsel retained by the Investiga- Senator Lyndon B. Johnson offered the pro- publication of a newsletter reporting Con- tive Subcommittee and tax counsel retained vision by way of a floor amendment to the gressional voting records did not violate the by Respondent disagree regarding whether Revenue Act of 1954 without congressional entity’s tax exempt status. Rev. Rul. 80–282, the activities at issue constitute a violation hearings out of concern that funds provided 1980–2 C.B. 178. The IRS so held, notwith- of the tax-exempt organizations’ section by a charitable foundation had been used to standing its conclusion, that ‘‘the format 501(c)(3) status. The only clear conclusion finance the campaign of a primary opponent. and content of the publication are not neu- from the findings and the testimony before B. Hopkins, The Law of Tax-Exempt Organi- tral, since the organization reports each in- the Investigative Subcommittee is that zations, p. 327 (6th ed. 1992); Lobbying and cumbent’s votes and its own views on se- there is no clear answer. In the absence of a Political Activities of Tax-Exempt Organiza- lected legislative issues and indicates January 21, 1997 CONGRESSIONAL RECORD — HOUSE H183 whether the incumbent supported or opposed precedential authority.’’ ‘‘ABA Tax Section whether prohibited political activities have the organization’s view.’’ Id. The IRS based Members Suggest Exempt Organization occurred. This has created a string of prece- its ruling on a factual conclusion that ‘‘the Areas in Need of Precedential Guidance,’’ 94 dents applying the general rule to particular organization will not widely distribute its Tax Notes Today, 207–14 (Oct. 21, 1994). Celia fact patterns, without any unifying principle compilation of incumbents’ voting records Roady is presented first on the list of those being stated. We believe that it will be sig- . . . [and that n]o attempt will be made to upon whom principal authority for the prep- nificantly simpler for practitioners to advise target the publication toward particular aration of the memorandum rested and she is clients about, and for organizations to com- areas in which elections are occurring nor to listed as the Committee’s ‘‘Contact Person’’ time the date of publication to coincide with on the memorandum. Id. In that memoran- ply with, the statutory rule if the IRS devel- an election campaign.’’ Id. Accordingly, the dum to the Department of the Treasury, Ms. ops a concrete, unifying definition for politi- IRS opined, the issues presented in Revenue Roady observed: cal intervention, just as it has done for di- ruling 80–282 presented sufficient factual dis- ‘‘During the past two decades, there has rect and grass roots lobbying activities.’’ tinctions from the hypothetical prohibited been significant growth in our country’s tax- ABA Committee on Exempt Organizations situations set forth in Revenue Ruling 78–248 exempt sector and a corresponding prolifera- Recommends ‘‘Reasonable Person’’ Standard to permit the IRS to conclude that this enti- tion in the number of new legal issues con- for Determining Whether a Charity Partici- ty’s proposed activities, ‘‘in the manner de- fronting tax-exempt organizations. Signify- pates in Political Activities, 95 Tax Notes scribed above, will not constitute participa- ing this development, the number of tax-ex- tion or intervention in any political cam- empt organizations included in the Cumu- Today 53–11, Mar. 17, 1995. paign within the meaning of section lative List has increased from approximately Not surprisingly, therefore, in light of this 501(c)(3).’’ Id. 806,000 in 1974 to approximately 1,083,000 in recognized lack of guidance from the IRS, EFFECT OF THE IRS’ FACT-BASED ANALYSIS ON 1994. Many of these organizations * * * have the public record is replete with examples, in PUBLIC BEHAVIOR adopted evermore complex corporate struc- the time period leading up to the organiza- tures, and many have become involved in As a consequence of the IRS’ indications tion of the renewing American civilization that it would apply fluid, fact-specific analy- new investment activities made possible by course of charitable entities—entities that sis to charitable efforts to educate the public the evolution of financial markets. As tax- on political matters, the late 80’s and early exempt organizations have grown in number are well represented and advised as to the 90’s marked a period of wide-ranging opinion and ventured into new areas, their activities current state of the law—participating in the among tax practitioners as to the extent have raised numerous federal tax law ques- political arena unmolested by the IRS. For that political education by charitable enti- tions that are not adequately addressed by example, in 1986 and 1987, the IRS conducted ties would be permitted by the IRS. Specifi- existing precedential authorities. Answering a ten-month review of a tax exempt edu- cally, this period marked an era when tax ex- these questions has proved very difficult be- cational entity known as ‘‘Project Vote,’’ a empt entities were being called upon by so- cause at the same time as this expansion of national voter registration campaign that organizations and issues has been taking phisticated practitioners to educate and mo- enrolled more than 500,000 potential voters. tivate the public on an ever-widening range place, the amount of precedential guidance Critics of Project Vote’s activities alleged of issues. As would be expected, the legal lit- issued by the Internal Revenue IRS has de- erature of this period reflects the lack of creased dramatically. that the entity’s true objective was to accomplish the partisan objective of increasing guidance provided by the IRS with respect to * * * * * political education by tax exempt entities. ‘‘. . . Issuing precedential authority on the the Democratic vote. After reviewing See e.g., Lobbying and Political Activities of items described below that have already Project Vote’s activities, however, the IRS Tax-Exempt Organizations: Hearings before been the subject of non-precedential IRS concluded that the organization complied the Subcommittee on Oversight of the House guidance would greatly assist tax-exempt or- with the nonpartisan requirements of its Committee of Ways and Means, 100th Cong., ganizations in complying with the law. tax-exempt status. ‘‘Raising Money to Reg- 1st Sess. 6 (Opening remarks of Chairman ‘‘PUBLIC CHARITY ISSUE—POLITICAL ACTIVITIES ister More Voters,’’ The Exempt Organiza- Pickle) (‘‘I am concerned that the public sees ‘‘One of the most important areas in which tion Tax Review, p. 679 (Dec.–Jan. 1990); 7 see and hears a steady stream of media reports additional precedential guidance is needed is also, ‘‘Old Softie: Alan Cranston’s Soft about abuses in this area, and the IRS seems clarification of the prohibition on political Money Machine; Campaign Fund Ethics,’’ to be taking little or no action. The public activities by section 501(c)(3) organiza- The New Republic, p. 17 (Dec. 11, 1989) gets the impression that the Internal Reve- tions. . . . Illustrative of the political activi- (‘‘Though Project Vote mixed contributions nue Service is just looking the other way.’’); ties issue in the first category is the ques- from labor, corporations, foundations, and Maxwell Glen, ‘‘Battle Looming over Par- tion of when will the acts and statements of individuals, some of which may have been tisan Activities of Tax-Exempt Nonprofit Or- the religious organization’s minister be motivated by partisan goals, the IRS found ganizations,’’ The National Journal, p. 2294 treated as the acts and statements of the re- its voter registration activities to be per- (Dec. 1, 1994) (‘‘In fact, since the early 1970s, ligious organization for purposes of deter- fectly legal.’’). Thus, it is not surprising when it was accused of harassing Nixon Ad- mining whether the organization has vio- that, as early as 1984, charitable institutions ministration opponents, the IRS has seldom lated the prohibition against political cam- which consulted with tax counsel abandoned policed the nonprofit sphere for political par- paign activities contained in section 501(c)(4) affiliates (which are expressly per- tisanship, tax specialists say. ‘What you see 501(c)(3). The statement issued by Jimmy mitted by the Code to adopt partisan politi- now is a testing,’ and Washington lawyer Swaggart Ministries and endorsed by the cal positions) by merging those affiliates’ ac- Thomas A. Asher, ‘because the IRS has been Service when Ministries entered into a clos- remarkably reticent on the subject of the tivities into 501(c)(3) entities as a means of ing agreement with the Service articulated a reducing 501(c)(4) record keeping require- line between charity and the partisan activ- clear and reasonable position on this issue. ity of charitable organizations.’’); Frances R. ments. See e.g., Glen, at p. 2294 (Dec. 1, 1994) It would be helpful to know as well whether (‘‘‘I’ve had more than one client get rid of its Hill, ‘‘Newt Gingrich and Oliver Twist: Char- that position would apply for purposes of itable Contributions and Campaign Fi- C–4 [affiliate] by merging it into [the cli- section 4955. As noted, the Subcommittee re- ent’s] C–3,’ said Gail Harmon, an attorney nance,’’ Tax Notes, p. 237, 238 (Jan. 9, 1995) port also addresses a number of other ‘‘Cat- who represents about 30 nonprofit organiza- (‘‘While [the prohibition against participa- egory One’’ issues on which precedential tions, including NARAL. ‘The fact of having tion in political campaigns] is absolute, it is guidance would be quite helpful.’’ Id. far from clear what activity it prohibits In a subsequent document submitted by to keep separate records does discourage’ short of direct endorsement of a particular Ms. Roady’s A.B.A. Committee on Exempt having both.’’). candidate by an official speaking on behalf Organizations (for which Ms. Roady was Historically, the IRS’ reticence to con- of the organization. In all other cases, the again designated as the ‘‘Contact Person’’) clude that political activity does not violate law offers little guidance and perhaps even to the Commissioner of the IRS on February the political intervention doctrine is not less restraint.’’). 21, 1995, Ms. Roady and the American Bar As- limited to political education activities. See, Apparently, this concern among leading sociation Section on Taxation observed: tax practitioners regarding the lack of guid- ‘‘Our most serious concern is that the IRS e.g., Wimmer, ‘‘Curtailing the Political In- ance provided by the IRS with respect to po- is facing a crisis of credibility with respect fluence of Section 501(c)(3) Tax Exempt Ma- litical education by tax exempt entities was to the Section 501(c)(3) political prohibition. chines,’’ 11 Va. Tax Rev. 605, 606 (1992) shared by Celia Roady,6 the tax expert re- Despite some publicized enforcement ac- (‘‘Many of the groups that successfully op- tained by the Special Counsel to testify in tions, such as the Jimmy Swaggart Min- posed [Judge Robert] Bork’s nomination to favor of sanctioning Respondent. On Septem- istries settlement, there is still widespread the high court were section 501(c)(3) tax-ex- ber 28, 1994, the Exempt Organizations Com- confusion as to what constitutes ‘participa- empt organizations, entities prohibited from mittee of the American Bar Association’s tion’ or ‘invervention’ in a political cam- intervening in any political campaign and Section on Taxation presented a memoran- paign. As a consequence, compliance within prohibited from carrying on substantial ac- dum to Mr. Leslie B. Samuels, Assistant Sec- the charitable sector is highly uneven. Some retary for Tax Policy at the Department of organizations openly flout the rule; others tivities designed to influence legislation. the Treasury, suggesting clarification of nu- are reluctant to engage in legitimate edu- These organizations took full advantage of merous issues facing tax practitioners under cational activities during an election period. the ‘particularly murky’ rules governing section 501(c)(3) for which the Exempt Orga- * * * * * how tax-exempt organizations could influ- nizations Committee believed there ‘‘cur- ‘‘Up to now, it appears that the IRS has ence the Senate’s confirmation of judicial rently is no authority, or there is unclear been using a ‘‘smell’’ test to determine nominations.’’). H184 CONGRESSIONAL RECORD — HOUSE January 21, 1997 As a consequence of the IRS’ lack of guid- els of voter participation among minorities, ter’’), in the Spring of 1990, Mr. Callaway re- ance in this arena, participation in chari- low-income people, or other politically dis- vived ALOF as a means of sponsoring the table education activities by Members of advantaged groups. American Citizens’ Television (‘‘ACTV’’) pro- Congress was commonplace in the time lead- ‘‘However, those rulings do not appear to gram. At the time, there was only $486.08 in ing up to the organization and formation of contemplate activities benefiting an under- the ALOF bank account. Recognizing that the renewing American civilization course. represented group of POTENTIAL CAN- ACTV’s goal of increasing community in- For example, a National Journal review of DIDATES. As a consequence, it is not clear volvement and citizen understanding of gov- Members’ 1988 financial disclosure form re- whether a charity which runs an educational ernment and democracy presented a logical vealed that 51 Senators and 146 House Mem- program to train individuals in political extension of ALOF’s original educational bers were founders, officers or directors of campaign skills must offer it to the general mandate to motivate people and get them in- tax-exempt organizations. The Exempt Orga- public, rather than to any limited group. Our volved in their community, Mr. Callaway of- nization Tax Review, p. 680, Dec.–Jan. 1990; impression is that such a program must be fered ALOF as ACTV’s sponsor. Callaway see also ‘‘Members of Congress Insist Foun- conducted in a thoroughly nonpartisan man- Letter, p. 1–2. dations Aid Causes, Not Politics,’’ Washing- ner with respect to recruitment of instruc- ACTV, like a project previously run by ton Post, February 22, 1990, at A21 (identify- tors and students, curriculum, placement of GOPAC known as ‘‘American Opportunities ing tax exempt groups associated with Mem- graduates, and all other aspects of operation. Workshop’’ (‘‘AOW’’), was a self-described bers of Congress). In 1993 Financial Disclo- Existing precedents, such as the American non-partisan project ‘‘based on the three ten- sure Forms, at least 93 Members of Congress Campaign Academy decision, speak more to ants [sic] of Basic American Values, Entre- were founders, directors, officers or trustees what is prohibited than to what is permitted, preneurial Free Enterprise, and Techno- of at least 210 tax-exempt organizations, in- and thus offer little helpful guidance on this logical Progress and involved the recruiting cluding at least 109 section 501(c)(3) entities. score. of activists to set up local workshops around See, Financial Disclosure Reports of Mem- ‘‘We urge the IRS to state explicitly that the broadcast to recruit people to the citi- bers of the United States House of Rep- charitable organizations are permitted to or- zens’ movement.’’ (S.A.V., T9). Respondent resentatives of the 105th Congress. Likewise, ganize and operate certain types of campaign participated in two ACTV broadcasts pro- five candidates in the 1988 Presidential elec- schools that serve indeterminate groups of duced by ALOF; aired on July 21, 1990 and tion contest employed tax-exempt groups to persons who have been under-represented in September 29, 1990. Id., T10. perform research and educational activities the political life of our society. This would Mr. Callaway has several times expressly in the months preceding their campaigns. be consistent with the current IRS position stated that ‘‘Dan Swillenger [sic], our attor- The Exempt Organization Tax Review, p. 680 on nonpartisan, voter-oriented educational ney, approved ACT as an appropriate activ- (Dec.–Jan. 1990). activities. ity for a 501 c) 3) foundation and in accord The prevailing attitude among tax special- ‘‘We think that IRS approval of candidate with the ALOF charter. I gave explicit in- ists in the early 90’s is encapsulated in the campaign schools benefiting politically dis- structions that there be no politics involved comments of Washington fund-raiser Jan advantaged groups, like its long-standing ap- in the ACT programs and to the best of my Scott Brown as reported in the National proval of voter participation activities di- knowledge there was none.’’ Callaway Let- Journal: ‘‘Every nonprofit puts a Congress- rected at a variety of charitable and other ter, p. 2–3. man on their committee. That’s the first diverse groups, would be consistent with the The statements made in the Callaway Let- thing I think of with a nonprofit client—how general definition we propose. In essence, the ter were repeated in an interview that Mr. can I work in some political angle? That’s IRS has embraced voter registration and Callaway gave to the Boston Globe. Accord- the name of the game in town.’’ Maxwell similar activities as a valuable public serving to that article, ‘‘Callaway stressed that he and Gingrich Glen, ‘‘Battle Looming over Partisan Activi- ice, recognizing that low voter participation had been told by a lawyer that it was legal ties of Tax-Exempt Nonprofit Organiza- rates seriously undermine the functioning of because the shows were ‘‘educational,’’ not tions,’’ The National Journal, p. 2294 (Dec. 1, our democracy. Therefore, a charity should political. 1994) be able to develop a voter education program Indeed, the criticism of the Special Coun- directed at under-represented sectors of our * * * * * sel’s tax expert, Ms. Roady, of Respondent’s society without violating the political prohi- ‘‘According to Callaway, Gingrich and his activities on this issue appears disingenuous bition, so long as it makes no suggestion to associates looked to a nonprofit corporation at best. In February of 1995, the Exempt Or- anyone on how to vote or what office to that could accept tax-deductible donations. ganizations Committee of the American Bar seek. In other words, voter participation pro- In contrast, contributions to political action Association—for which Ms. Roady was iden- grams (and, we believe, disadvantaged-can- committees are not deductible. tified as the Committee’s ‘‘Contact Per- didate education programs) have an inherent ‘‘Callaway thought it would take too long son’’—requested that the Internal Revenue educational value (‘‘some other reasonable to get IRS approval to set up a new nonprofit Service formally approve of activity under explanation’’) that outweighs any implica- corporation to fund Gingrich’s television existing precedent virtually identical to Re- tion that they were undertaken for a prohib- shows, so he revived the Lincoln Foundation, spondent’s Renewing American Civilization ited political purpose (‘‘to improve or dimin- which had been dormant for years. course; the only difference being that Ms. ish’’ someone’s chances of getting elected). ‘‘Callaway said Daniel Swillinger, a Roady’s expressed preference would be that So long as the program is not a disguised ef- GOPAC lawyer, told them the foundation’s it be only ‘‘politically disadvantaged fort to promote a candidate, party, or other charter allowed it to pay for Gingrich’s tele- groups,’’ rather than the American citizenry private interest (as in the American Cam- vision show.’’ Ex-foundation Director Says as a whole, that is encouraged to participate paign Academy case), simply providing peo- Gingrich OK’d Use of Funds, The Boston more actively in the grass-roots political ple with the tools to participate in the polit- Globe, Nov. 22, 1996, at A1. Of the two tax experts to appear for the process: ical process should not violate the Section ‘‘One could argue that the general rule we purposes of Preliminary Inquiry before the 501(c)(3) prohibition.’’ ABA Committee on propose appears to be overbroad, since it Subcommittee, one opined that the described Exempt Organizations Recommends ‘‘Rea- states that a 501(c)(3) organization cannot in- activity would not violate ALOF’s status sonable Person’’ Standard for Determining tentionally help ANY group of people to seek under section 501(c)(3). The expert, retained Whether a Charity Participates in Political public office. What if the group is an indefi- by the Special Counsel, opined to the con- Activities, 95 Tax Notes Today 53–11, Mar. 17, nite class of persons that has been system- trary. That same expert, Celia Roady, is the 1995. atically under-represented in elective office, same attorney who prepared a memoran- such as African-Americans or people with ABRAHAM LINCOLN OPPORTUNITY FOUNDATION dum 8 to the Department of the Treasury be- disabilities? Why couldn’t a charity operate (‘‘ALOF’’) moaning the IRS’s lack of guidance available a campaign training school to assist, for in- In 1984, Colorado Republican Party Chair- to practitioners called upon to provide coun- stance, Spanish-speaking people to become man Howard ‘‘Bo’’ Callaway received tax-ex- sel to non-lawyers, such as Respondent, who effective campaign operatives or even can- empt status from the IRS for ALOF, an en- desire to use tax exempt charities for the didates themselves? tity organized to conduct oratory contests purpose of providing political education to ‘‘It is clear that the IRS has been willing throughout Colorado secondary schools, lend the public. to permit VOTER-ORIENTED activities such care and assistance to the needy ‘‘and to pro- There are several important facts which as registration drives, get-out-the-vote, and vide educational services to the public.’’ should be noted regarding ALOF. First, Re- voter education, where a certain group of ALOF’s officers consisted of Howard ‘‘Bo’’ spondent was not at any time a member of voters is encouraged to participate more ac- Callaway, who was the Chairman of GOPAC, the Board of Directors or an officer of ALOF. tively in the political life of the country. For and Kay Riddle, Executive Director of Second, contributors to ALOF always knew instance, the IRS concluded in PLR 9223050 GOPAC. Upon Mr. Callaway’s resignation the purpose of their donations. ALOF began that voter registration of homeless people, from the Colorado Republican Party, ALOF to pay for the ACTV programs in June of coupled with education about the electoral entered a period of dormancy in June of 1988. 1990. On May 30, 1990, there was only $486.08 process, was a valid, nonpartisan, charitable As described in a January 2, 1997 letter from in the ALOF bank account. With the excep- activity that did not violate Section Mr. Callaway to the Honorable Christopher tion of this small sum, which was used just 501(c)(3). This is consistent with the position Shays and distributed by Mr. Shays to other to keep the bank account open, all of the generally taken by the IRS that charities Members of Congress (attached hereto as Ex- money used to produce ACTV was raised spe- may engage in activities to increase the lev- hibit F and referred to as ‘‘Callaway Let- cifically for ACTV with money contributed January 21, 1997 CONGRESSIONAL RECORD — HOUSE H185 from people who knew what their money was people’’10 or other conduct which creates an only wrong if the conduct in question vio- going to be used for and who fully supported appearance of impropriety. Such a standard lates the technical parameters set out by the the ACTV programs. Third, the Articles of is currently embodied in House Rule 43(1), Internal Revenue Code. Furthermore, this is Incorporation of ALOF, submitted to the which provides: ‘‘A Member, officer, or em- not even a case in which it is alleged that a IRS when ALOF applied for tax exemption ployee of the House of Representatives shall Member violated the law; but rather it is one stated in part that the purposes of ALOF conduct himself at all times in a manner step further removed. This is a case in which were:’’ ‘‘. . . to provide educational services which shall reflect creditably on the House a Member is alleged to have failed to appre- to the public. . . .’’ The Bylaws passed pur- of Representatives.’’ However, the applica- ciate fully his need for technical guidance so suant to the Articles of Incorporation stated tion of this standard is limited, or should be, as to avoid the controversy generated by the that the purposes of ALOF, in part are to: to those cases where the conduct is wrong in divergence of expert opinion with respect to ‘‘. . . provide education services to the pub- and of itself or where a violation of the law his conduct. lic, and to engage in any and all lawful ac- has already been found by a proper adjudica- The dangers of such a precedent lie in the tivities incidental to the forgoing purposes. tory body.11 The House Ethics Manual ob- fact that: ‘‘appearance’’ standards are so . . .’’ The Bylaws further stated that ‘‘The serves that ‘‘[a] review of these cases indi- vague as to have little content, thus provid- purposes of the Corporation are promoted cates that the Committee has historically ing scant guidance to members and their and developed through public discussion viewed clause 1 as encompassing violations staffs in shaping their conduct and, at the groups, panels, lectures, conferences, of law and abuses of official position.’’ House same time, exposing them to the possibility projects, publications and program. . . .’’ Ethics Manual at 14 (footnote omitted). In of manipulable complaints and prosecution. Fourth, money given to ALOF was kept sep- such cases, Members are well-placed to pass In the words of the ABA Committee on Gov- arate from and not commingled with GOPAC on the conduct of their colleagues, as, in- ernment Standards, ‘‘beyond [an] initial role funds. Consistent with IRS rules and com- deed, is any citizen, as such conduct so clear- in rule formation, ‘appearance of impropri- mon practice, ALOF’s expenses were sepa- ly transgresses the acceptable bounds placed ety’ is too vague and contestable a concept rately allocated and paid. Anyone who on individuals in our society. to function effectively as an independent worked on both projects had salary allocated By contrast, the basis for the investigation benchmark in a system of ethics regula- 12 based on the time spent on each. in the present proceeding relates to a com- tions.’’ Such a precedent would undoubtedly have Within this context, Respondent has ad- plex and difficult question of tax law relat- a chilling effect on Member participation in mitted the violation contained in the State- ing to the permissible activities of tax-ex- charitable or educational organizations now ment of Alleged Violation. Notwithstanding empt entities. Such questions should not expressly permitted by the Committee.13 the common practice at the time, it was inform the basis for a finding that a Member has violated the Code of Official Conduct un- The subcommittee has created a new cumbent on the Respondent to engage quali- wrong not heretofore known to law: conduct fied tax attorneys to assure that his activi- less a properly constituted administrative or judicial authority has previously found that which creates a ‘‘public controversy.’’ Let us ties in the furtherance of a movement would be clear that this new hybrid is substantially not jeopardize the tax-exempt status of the the Member has in fact committed acts prohibited by the tax code. To punish a Member different from sanctioning a member for the organizations involved and would not unnec- commission of a malum in se involving in- essarily engender public controversy that for creating a public controversy involving the legality of a Member’s involvement with famy for clearly immoral or unjust conduct. would bring discredit on the House. This is Furthermore, the subcommittee seeks to true as to both the Renewing American Civ- organizations exempt from taxation under section 501(c)(3) of the Internal Revenue Code punish Respondent for failing to engage ilization course and the Abraham Lincoln counsel to avoid such controversy. Yet the Opportunity Foundation. without any violation of the law having been found by the Internal Revenue Service or practical implications of this newly-created THE ABSENCE OF PRECEDENT MITIGATES IN this Committee is not only unprecedented, offense make it difficult to understand how FAVOR OF RESPONDENT but unwise. engagement of counsel would serve as a de- The Committee is urged to consider, as a In establishing a bright-line rule to distin- fense as the subcommittee’s Statement of mitigating circumstance, the unprecedented guish between those matters properly gov- Alleged Violation suggests. Is it a ‘‘public nature of the charge relating to the creation erned by the standard set forth in House controversy’’ if experts disagree and there is of a ‘‘public controversy.’’ No Member of Rule 43(1), it is helpful to refer to the long- little or no media attention, or is it only a Congress could reasonably have known that recognized distinction between and mala in ‘‘public controversy’’ if experts disagree and such a standard might be imposed. As early se (literally, ‘‘wrongs in themselves’’) and there is substantial media attention? Is it a as November 15, 1994, Representative Bob mala prohibita (‘‘prohibited wrongs’’). See, perfect defense to have consulted counsel? Michel wrote a letter to Representatives Morisette v. United States, 342 U.S. 246 (1952); What if counsel is diligent but mistaken? McDermott and Grandy indicating his strong United States v. Park, 421 U.S. 658 (1975). Mala What if counsel renders incorrect advice? belief that the information requested by the in se are aggravated wrongs and injuries in Does the Member have to seek Board cer- Committee on October 31, 1994 regarding tax- derogation of public morals and decency. Ex- tified counsel? These and a panoply of other exempt entities was beyond the Committee’s amples include killing and stealing. While practical problems present themselves if a jurisdiction to sanction. Specifically, Rep- such offenses may or may not violate a spe- sanction is predicated upon this as yet un- resentative Michel commented: ‘‘. . . [T]he cific law, we all know that such acts are in- trodden minefield. information you request goes to the legal herently wrong and we punish those who The policy reasons for declining to create status of a 501(c)(3) entity, an entity that I commit such offenses. The Committee on such a precedent are numerous. First, allow- believe is outside of the jurisdiction of the Standards of Official Conduct can, and ing the mere allegation of violations of the Committee on Standards. To my knowledge, should, recommend appropriate punishment law to become a basis for ethics charges will there is no precedent for such an inquiry. for the commission of mala in se even if the encourage political opponents to use the law The Committee has never launched a formal Committee finds that there has been no vio- and the ethics process as tools of political or informal investigation of such an entity. lation of the law. strategy. The controversy surrounding the The Internal Revenue Service might be in- Mala prohibita, on the other hand, are acts Federal Election Commission’s complaint terested in the tax status of this particular that are wrong only in the sense that they against GOPAC filed in the Federal District group but it appears outside of your jurisdic- are specifically prohibited by the state. In Court for the District of Columbia provides a tion.’’ (Letter of Rep. Bob Michel to Reps. many instances, determining whether a case in point. See, Federal Election Comm’n v. Jim McDermott and Fred Grandy, November malum prohibitum has been committed re- GOPAC, Inc., 917 F.Supp. 851 (D.D.C. 1996). In 15, 1994 at 1). quires the application of specialized exper- April, 1994, the FEC filed a civil action Indeed, this view was echoed by a Member tise as to the state’s technical prohibition. If against GOPAC alleging that, in 1989 and of the Committee’s own legal counsel’s of- it is found, by a properly constituted admin- 1990, GOPAC had failed to register as a ‘‘po- fice, David McCarthy, when Respondent and istrative or judicial tribunal with the exper- litical committee’’ as required by the Fed- his staff first consulted with McCarthy in tise to comprehend and adjudicate the al- eral Election Campaign Act, 2 U.S.C. §§ 433(a) June of 1993 regarding the Renewing Amer- leged violation, that a Member has violated and 434(a). One of the primary contentions ican Civilization course. (See Letter of David such a law then sanctioning the Member pur- made by the FEC was that GOPAC funds to J. McCarthy to Rep. David Hobson, Decem- suant to Rule 43(1) is perfectly appropriate support Respondent as chairman of GOPAC ber 1, 1994). The sound policy reasons for as such conduct does not reflect creditably were utilized by Respondent’s election cam- placing such matters outside the Commit- on the House. In the absence of such a find- paign. The filing of the case prompted great tee’s jurisdiction have been borne out by the ing, however, the Committee should abstain speculation among the press and generated present proceeding which has been costly not from becoming involved in investigating and headlines such as ‘‘Another Ethical Problem only in financial terms, but also in terms of attempting to resolve such questions. for Newt,’’ 14 ‘‘FEC Says GOPAC Aided Ging- the integrity of the House ethics process. The Committee’s investigation of Respond- rich Race Despite Law; Group Barred From The power of both Houses of Congress to ent in the present case has attempted to Federal Campaigns in 1990’’ 15 and ‘‘GOPAC discipline their Members for ‘‘disorderly Be- apply Rule 43(1), in an unprecedented man- secretly aided Gingrich in 1990, election offi- havior’’ is recognized by the Constitution it- ner. The conduct being investigated in this cials charge.’’ 16 However, the FEC’s com- self.9 House precedent recognizes the power proceeding—using charitable funds for edu- plaint was disposed of by the district court of this body to discipline its Members for cational or allegedly partisan political ac- on summary judgment. The parallels to the ‘‘conduct unworthy of a representative of the tivities—is not a wrong in and of itself. It is present case are apparent. Despite the vast H186 CONGRESSIONAL RECORD — HOUSE January 21, 1997 number of allegations regarding Respond- efficient nor a wise use of the resources of ‘‘I also felt that because the Committee’s ent’s violations of federal election laws in this great body. While the Committee should written answer might decline to offer advice the press, when a ‘‘controversial’’ claim was not engage in deciding whether Members on Eisenach’s fundraising activity—it being exposed to rigorous examination in proper a have committed mala prohibita, it should outside the Committee’s purview—he might judicial forum the claim was found insuffi- continue its traditional and proper role of be just as well off not to raise the question cient to survive a motion for summary judg- disciplining Members for committing mala in his letter. My experience was that Mem- ment. Yet if allegations alone that ‘‘con- in se. For such offenses the House is, and bers found it annoying when the Committee troversy’’ had been generated provided a suf- should be, the court of last resort. in a written advisory opinion would explic- ficient basis for an investigation and dis- These arguments are not a challenge to itly decline to answer a question. I believe cipline under Rule 43(l), Respondent might this Committee’s jurisdiction for that time that there was some brief discussion about have been once again forced to expend great has passed. Rather, the Committee should Eisenach leaving GOPAC, in any event, to amounts of effort and money in defense and carefully consider the lack of guidance avail- focus on the course fundraising.’’ (Letter of the Committee might have been forced to able to Members, including Respondent, dur- David J. McCarthy to Rep. David Hobson, consume a great deal of its time in inves- ing the period in question as a mitigating December 1, 1994 at 1–2). tigating claims that proved to be baseless factor in considering its recommendation to The significance of these passages from when subjected to judicial scrutiny. For this the Full House. In addition, the Committee McCarthy’s letter is twofold. First, they reason, cases involving mala prohibita such should carefully consider the troubling con- demonstrate that Respondent expressly ref- as violations of federal elections law or the cerns raised by this application of Rule 43(1) erenced GOPAC and the involvement of tax code ought to be left to regulators and as other members attempt to conform their Eisenach in course fundraising in his con- the courts who are ultimately better conduct to the Code of Official Conduct. sultations with Committee counsel.20 Sec- equipped to address technical aspects of the DECEMBER 8, 1994 AND MARCH 27, 1995 LETTERS ondly, these passages explain that Respond- law. As background, it is important to note ent did not make reference to GOPAC in- Not only is this Committee ill-equipped to that the Respondent has been proactive, as volvement in the course in his letter of July address allegations that such laws have been opposed to reactive, with the Committee in 21, 1993 providing additional information to violated, but to do so ultimately undermines connection with the Renewing American Civ- Representative McDermott as Committee the administrative enforcement process of ilization course and any potential ethics is- Chairman on the express advice of Commit- many of these laws that Congress itself cre- sues which it might present. Respondent has tee counsel. (See Letter to Rep. Jim ated and creates, in effect, a highly politi- waived attorney-client privileges, produced McDermott, July 21, 1993; see also, Letter cized system parallel to the enforcement thousands of documents and met with the In- from Committee to Speaker Gingrich, Octo- mechanisms of the FEC and IRS that is ap- vestigative Subcommittee at its conven- ber 31, 1994 at 2). plicable only to Members of the House. ience. The proactive involvement began with Then, on September 7, 1994, Ben Jones, Re- Under such a system, Members may be inves- his letter dated May 12, 1993 in which he spe- spondent’s electoral opponent, filed his first tigated for alleged violations of highly tech- cifically inquired if ‘‘the committee [had] ethics complaint against Respondent. Re- nical laws and forced to endure great time any concerns about this project.’’ Then, in spondent’s initial responsive submission to and expense only to reach a conclusion that June of 1993, Respondent, Jeffrey Eisenach, the Committee dated October 4, 1994, pre- the Committee simply is not qualified to re- Annette Meeks and Linda Nave met with pared by a member of Respondent’s staff, ex- solve such questions. then Committee counsel David J. McCarthy. pressly refers to GOPAC’s involvement in In discussing the merits and benefits of a (See Letter of Speaker Gingrich to Reps. the course. In particular, the letter states: disclosure-based ethics system for Members Goss and Cardin, October 31, 1996 with at- ‘‘I would like to make it abundantly clear of Congress, one commentator highlighted tachments (including Letter of David J. that those who were paid for course prepara- the unique concerns presented by claims McCarthy to Rep. Hobson, December 1, tion were paid by either the Kennesaw State that a Member has violated a highly tech- 1994)). During the course of that meeting, Foundation [sic], the Progress and Freedom nical prohibition and the need for particular- Mr. McCarthy recalls that: Foundation or GOPAC . . . Those persons ized expertise to make such a determination. ‘‘The discussion eventually turned to fund- paid by one of the aforementioned groups in- Specifically, ‘‘disclosure is not the most ef- raising for the course. Jeff Eisenach began to clude: Dr. Jeffrey Eisenach, Mike DuGally, fective tool to employ against conduct that volunteer details of how he contemplated Jana Rogers, Patty Stechschultez [sic], violates highly technical regulations or is it- fundraising, and I interrupted his expla- Pamla Prochnow, Dr. Steve Hanser, Joe Gay- self composed of a complex or highly nation with a question, ‘‘are you on the lord and Nancy Desmond.’’ (Letter to Rep. nuanced series of events. In such cir- House payroll?’’ When he answered that he Jim McDermott, October 4, 1994 at 2). (em- cumstances, it seems that the risk of manip- was not, never had been, and did not ever ex- phasis added.) ulation and/or voter misunderstanding would pect to be I shifted the focus of the discus- As the above-quoted passage indicates, Re- be high; accordingly, entrusting an entity sion by explaining that I was not interested spondent expressly referred in correspond- such as the Federal Election Commission in what Eisenach was planning to do, I was ence with the Committee to the involvement with the responsibility to police such areas only interested in what Mr. Gingrich and of GOPAC in the course and the use of as technical campaign regulations might be any House employees were going to do * * *. GOPAC funds to pay individuals for course preferable. In this regard, it is important to * * * * * preparation. Indeed, there is no question recognize that the question of whether a vio- ‘‘Then Mr. Gingrich again brought up that the Committee was aware of involve- lation has occurred can be separated from Eisenach and asked whether he should not ment by GOPAC. This knowledge was con- the question of whether a sanction should be get the Committee’s written advice that firmed in the Committee’s letter dated Octo- imposed. 17 Eisenach would be permitted to engage in ber 31, 1994 to Respondent. Significantly, the From a policy standpoint, it would be far the fundraising. His concern seemed to be Committee’s letter notes that Respondent’s preferable for the Committee to take action that Eisenach’s identity with GOPAC, along October 4, 1994 letter ‘‘sufficiently with respect to allegations of this nature with his fundraising for the course through answer[ed] most of the allegations raised in only after it has been found that a Member the college foundation, could open him to Mr. Jones’ complaint.’’ has violated the law by an administrative criticism that the motivation for the course Eliminating any issue regarding the Com- agency or court subject to judicial review. was political. I replied that, in my judgment, mittee’s awareness of GOPAC’ involvement, Indeed, this Committee has on several occa- Mr. Gingrich should not ask the Committee however, the Committee’s October 31, 1994 sions deferred action pursuant to a request to pass on the activity of Eisenach. letter went on to state: ‘‘A number of docu- from the Department of Justice. 18 Such an ‘‘First, I explained that because Eisenach ments reflect the involvement of GOPAC and approach in no way diminishes the authority was not a Member, officer or employee of the GOPAC employees in developing and raising of this Committee to regulate the conduct of House his activity was really outside of the funds for the course.’’ The letter continues: Members on behalf of the House as once a Committee’s jurisdiction. Secondly, I told ‘‘In addition to the above, various other doc- violation has been found by a competent tri- him that, to my knowledge of tax law, the uments related to the course were sent out bunal as House precedent clearly establishes issue of whether the contributions in support on GOPAC letterhead, were sent from that the Committee may investigate or sanc- of the course would keep their tax-deductible GOPAC’s fax machine, used GOPAC’s address tion the Member for conduct which does not status would turn not on who did the fund- as a place to mail materials related to the reflect creditably on the House. 19 raising but on how the funds were spent, and course, and referred to registration mate- Yet to expand dramatically this Commit- that the educational nature of the course rials being included in GOPAC Farmteam tee’s jurisdiction to consider technical viola- spoke for itself. I told him that I was aware mailings.’’ In all, the Committee’s October tions of statutes not governing mala in se is of no law or IRS regulation that would pre- 31, 1994 letter makes reference to GOPAC no to open a Pandora’s box which it may be im- vent Eisenach from raising charitable con- less than 46 times and cites extensive docu- possible to close again. If this path is taken, tributions, even at the same time that he mentation referring to GOPAC. (See, Letter this Committee will become a special tribu- was raising political contributions. In any from Committee to Speaker Gingrich, Octo- nal which tries to hear and decide, without event, I advised him, I expected the Commit- ber 31, 1994). Interestingly, from the original right of appeal, every conceivable allegation tee to stick by its advisory opinion in the complaint to the October 31, 1994 Committee that might be levied against a Member re- Ethics Manual and not get into second- correspondence, GOPAC is mentioned by gardless of whether it is malum prohibitum guessing the IRS on its determination of tax- name 92 times in correspondence to and from or malum in se. Such an action is neither an exempt status, the Committee. January 21, 1997 CONGRESSIONAL RECORD — HOUSE H187

DECEMBER 8, 1994 LETTER responsible for preparing the response in co- March 27, 1995, submission in addition to As reflected above, the Committee’s re- ordination with his staff member. (Gingrich that previously done for the December 8, quest for information was dated October 31, Tr., 11/13/96, at 28). Respondent indicated 1994, submission, the partner replied: ‘‘Fac- 1994. On November 8, 1994, election day, Re- that, in assigning this task, ‘‘[the staff mem- tual inquiry—none that I recall—no.’’ (Baran publicans captured a majority of seats in the ber] would have been acting with my author- Tr. at 30–31). The partner’s testimony was U.S. House of Representatives. The process ity to conduct what we thought at the time that after drafting and editing the March 27, of transition began immediately. In the con- was a thorough investigation.’’ (Gingrich 1995, document ‘‘at some point we would text of these events Respondent retained Tr., 11/13/96, at 15–16). However, the testi- have sent a draft that we felt comfortable counsel on November 15, 1994 to represent mony makes apparent that the staff member with over to the Speaker’s office.’’ (Baran him in connection with the ethics investiga- believed that the partner attorney was Tr. at 28). The partner testified that he did tion. checking the factual basis of the statements not recall any discussions with the Respond- Counsel began preparation of the response. for accuracy while the partner attorney was ent prior to the submission of the March 27, An associate was assigned to prepare an ini- under the misimpression that the staff mem- 1995 letter over the partner’s signature. tial draft of the response. The attorneys co- ber was doing so.21 This miscommunication (Baran Tr. at 32). The firm’s billing records ordinated their efforts with a member of Re- extended not only to the research into the reflect that the submission was filed on spondent’s staff. Subsequently, the Decem- factual bases for the statements but to the March 27, 1995 at 6:05 and delivered to Tony ber 8, 1994 letter was presented to Respond- communication of these findings to Respond- Blankley of Respondent’s staff at 6:35 that ent for review and signature. It does not ap- ent. As noted above, the partner attorney same evening. (WFP 00224). pear that there was any communication be- testified that he did not discuss the contents The purpose of this extended review of the tween the attorneys and the Respondent of the letter with Respondent prior to sub- testimony offered in this proceeding regard- until after December 8, 1994. mission. (Baran Tr. at 18, 33) nor does Re- ing the process of preparing these submis- Regarding the response, Respondent testi- spondent recall such a meeting. (Gingrich sions to the Committee is not an attempt to fied that he would have turned and said ‘‘I Tr., 11/13/96, at 30). Nor apparently did any- shift the ultimate responsibility for submit- want this done. .. .’’ (Gingrich Tr., 11/13/96, at one on Respondent’s staff confirm the facts ting these statements from Respondent to p. 28) Respondent testified that, in Novem- contained in the letter with Respondent others, but only to demonstrate that the tes- ber, ‘‘we, in effect, had decided to go from prior to its submission in any systematic timony of record in this matter clearly sup- [the staff member] being in charge to [the fashion. The staff member’s recollection is ports the conclusion that any inaccuracies staff member] coordinating with the law that she did not even see Respondent during contained in these submissions were the re- firm and the law firm being in charge.’’ Re- the signing process, but forwarded the letter sult of regrettable errors rather than of any spondent testified that it was his under- to Respondent for signature through the ex- intent to mislead this Committee. In their standing that the law firm was primarily re- ecutive assistant. (Meeks Tr. 15 76–77). testimony before this Committee, the staff sponsible for drafting the December 8th let- MARCH 27, 1995, LETTER members as well as the attorneys repeatedly ter. (Gingrich Tr. 11/13/96, at 28). Turning then to the letter to the Commit- testified that they were never told, directly The firm partner recalls that his role and tee of March 27, 1995, similar miscues appear or indirectly, by Respondent, or anyone on that of his firm in the preparation of the De- to have resulted in inaccuracies in state- his behalf, to provide anything other than cember 8, 1994 letter was to prepare a re- ments made to the Committee. Again the at- accurate information to the Committee. ‘‘Mr. GOSS. For the record, you may want sponse working with the staff member. torneys had responsibility for the prepara- to respond to this. I will try and make it as (Baran Tr. at 6–7). The partner assigned re- tion of the submission on Respondent’s be- clearly as I can. Do you have any personal sponsibility for preparing an initial draft to half, and on this occasion, the responsibility knowledge of whether the Speaker either di- an associate at the firm. (Baran Tr. at 9–10; for the initial drafting fell to the associate rectly or through his attorney Mr. Baran de- Mehlman Tr. at 15). The associate testified as well as to a more senior associate. The liberately provided anything other than ac- that in preparing the draft response to the senior associate testified that, in drafting curate, reliable or complete information to October 31, 1994 letter, he relied upon ‘‘var- the facts section of the March 27 response, he this committee regarding his response relat- ious correspondence’’ between Respondent relied upon the October 4 letter, the attached to the complaints with regard to the let- and the Committee including the October 4, ments to the amended complaint, the origi- ters that we have talked about today? 1994 letter, the course book, a pamphlet on nal Jones complaint and its exhibits, the De- ‘‘The WITNESS. Do I have any knowledge the course, and the Jones’ complaint with cember 8 letter, all of the exhibits included that any of the information was false? Is exhibits and the videotapes of the course. with the March 27 submission and conversa- that the question? (Mehlman Tr. at 15–16). The associate further tions with the Respondent’s staff member. ‘‘Mr. GOSS. Was deliberately provided, that testified that it was his understanding that (Toner Tr. at 19, 29–30, 34). The senior associ- was other than accurate, reliable or com- he did not need to go beyond these materials ate further indicated that he made no con- plete. in drafting the response. (Mehlman Tr. at tact with anyone at GOPAC, the Progress & ‘‘The WITNESS. No. 19). The associate testified that, in preparing Freedom Foundation, Reinhardt College, ‘‘Mr. GOSS. Do you know if Mr. Gingrich at the draft, he never contacted anyone at Kennesaw State College or the Kennesaw any time tried to forward or intended to for- GOPAC (Mehlman Tr. at 18, 28), nor did he State College Foundation in preparing the ward to us incomplete, inaccurate or unreli- contact Dr. Eisenach (Mehlman Tr. at 28) or March 27, 1995, letter. (Toner Tr. at 19–20; 26– able information? Respondent (Mehlman Tr. at 27) to confirm 27; see also, Baran Tr. at 27 (no contact with ‘‘The WITNESS. If I may editorialize on my any of the information contained in the De- GOPAC)). The junior associate similarly tes- answer for a second, we really—in the two cember 8, 1994 letter. The associate then met tified that he had relied upon the cor- replies that I was involved in, we really, in with the partner to review the draft and respondence and materials he had from the our estimation, tried to comply as fully, some editorial changes were made. December 8 submission as well as having re- completely, honestly, straightforward, and (Mehlman Tr. at 18). viewed other responses by the senior associ- promptly as we were able. The partner testified that his review was ate and the partner. (Mehlman Tr. 15 38). ‘‘Mr. SCHIFF. The question is did Mr. Ging- limited to the October 31, 1994 letter from Both associates indicated that they were rich ever suggest to you in any way, shape, the Committee, the Jones Complaint with not personally aware of efforts to check the or form, that you do other than that? exhibits and telephone conversations, and factual accuracy of the March 27, 1995, sub- ‘‘The WITNESS. Oh, goodness, no.’’ (Meeks that otherwise ‘‘[he] didn’t have any other mission. (Toner Tr. at 38–39; Mehlman Tr. at Tr. at 85–86). independent factual gathering.’’ (Baran Tr. 53). The senior associate testified that he ‘‘Mr. GOSS. Do you have any knowledge at 13). The partner further indicated that he was similarly unaware of any contacts with that Mr. Gingrich was aware that any of the had no contact with the Kennesaw State Col- people outside the firm, other than Respond- information contained in the letters that we lege Foundation (KSCF), Kennesaw State ent’s staff member, to confirm the factual have talked about at the time that those let- College or Reinhardt College in preparing basis for statements contained in the sub- ters were submitted were incomplete, mis- the December 8th letter. (Baran Tr. at 18). mission (Toner Tr. at 56), and that he was leading, or inaccurate? The partner further testified that his first not aware of any changes made to the docu- ‘‘The WITNESS. No.’’ (Baran Tr. at 60). contact with Respondent during this time ment based on comments from anyone asso- ‘‘Mr. SCHIFF. Could I ask you two questions period was on December 9, 1994, and that he ciated with the Respondent. (Toner Tr. at 60– on that; actually, I may be leaping ahead, had no recollection of having discussed the 61). The junior associate indicated that he but a general question? Was there anything letter at all and that he had no contact with did not recall contacting any outside persons told to you that you heard either directly or Respondent concerning the matter prior to to confirm such facts. (Mehlman Tr. at 38). indirectly, that indicated that it was the that time. (Baran Tr. at 18, 33). The partner additionally confirmed that, purpose of either the speaker or of Mr. Baran Turning then to the involvement of Re- while he reviewed the drafts and edits with or of anyone else connected with this case, spondent and his staff in the December 8, the associate, he did not recall making any to deceive this committee and to provide 1994 letter, the partner indicated that the outside inquiries of anyone regarding the Re- anything but accurate information? letter ‘‘eventually went from our office to newing American Civilization course with ‘‘The WITNESS. No. [the staff member.].’’ (Baran Tr. at 14). Re- one possible exception. (Baran Tr. at 28). ‘‘Mr. SCHIFF. Your assumption, then, is you spondent’s testimony confirms that it was Asked if he was aware of any additional are supposed to put together a correct state- his understanding that the law firm would be factual inquiry done in preparation for the ment of the facts and submit it to us? H188 CONGRESSIONAL RECORD — HOUSE January 21, 1997

‘‘The WITNESS. Absolutely.’’ (Toner Tr. at 4 See, infra p. 35–43. A. This was prepared by our counsel. I trust that 28). 5 IRC section 501(c)(3) identifies these qualifying he had—— Representative Goss summarized the testi- entities as: ‘‘[c]orporations, and any community Q. My question is, very specifically, did you have mony on this point most succinctly observ- chest, fund, or foundation, organized and operated any knowledge of the facts, personal knowledge of exclusively for religious, charitable, scientific, test- the facts, that are contained in the letter? ing: ing for public safety, literary, or educational pur- A. I would have, yes. I would have looked to Dave ‘‘Mr. GOSS. Okay. I have only one little poses, or to foster national or international amateur McCarthy, which characterized a conversation that thought. We seem to have gotten into a situ- sports competition (but only if no part of its activi- Linda Nave and I had with Mr. McCarthy, to verify ation where we know we have some informa- ties involve the provision of athletic facilities or Jan’s characterization of that conversion. tion that is not everything we desired it to equipment), or for the prevention of cruelty to chil- I verified Clerk’s report which I had provided a be, and we are trying to track down why and dren or animals, . . .’’ IRC § 501(c)(3). copy of and the termination papers that I had pro- how we got into that position. It seems that 6 FEC records reflect that Ms. Roady, a registered vided and also the Dave McCarthy conversation Democrat, has made political contributions totaling about GOPAC staff simultaneously working for the Mr. Gingrich was relying on you [Baran] and $1,550 to Emily’s List, The Rangel for Congress Com- some other people to do the December 8th course and for GOPAC. mittee, and the Democratic National Committee. Q. Anything else? letter, or his December 8th letter was given 7 The IRS has similarly refused to revoke the tax A. No. (Meeks Tr. at 45). to somebody else and they were supple- exempt status of a voter registration organization Q. No, I am now asking the letter itself, did you mented by your firm, and your firm in turn, promoted by then-Senator Alan Cranston and run by ever indicate to Mr. Baran that you had provided by your testimony, you were relying pretty his son, Kim Cranston. ‘‘Old Softie: Alan Cranston’s the December 8th letter prior to its going to the much on what that individual, who would be Soft Money Machine; Campaign Fund Ethics,’’ The committee to anyone for the purpose of checking its New Republic, p. 17 (Dec. 11, 1989); ‘‘Raising Money accuracy? Ms. Meeks, was doing and you were just to Register More Voters,’’ The Exempt Organization checking for legalities rather than sub- A. No, that would not have been—no. (Meeks Tr. Tax Review, p. 697 (Dec.–Jan. 1990). Indeed, ‘‘[i]n 87). stance, would be sort of the way I read your 1984, . . ., several foundations attempted to use their Mr. GOSS. So your answer, as of the December 8 testimony, and therefore the problem started tax-free assets to increase turnout by targeted letter, would be that all of the information that on December 8th was further compounded on groups and thus increase the Democratic vote in the came from outside came from Mr. Baran? March 27th on that letter because you used presidential election, according to election experts.’’ The WITNESS. Yes, sir. (Meeks Tr. at 67). some of the material from the December 8th ‘‘Raising Money to Register More Voters’’, p. 679. However, the partner testified as follows: 8 See, supra, p. 30. letter. Is that correct? Q. And again, I’m trying to understand exactly the 9 Art. I, § 5, cl. 2 provides: ‘‘Each House may deter- level of factual inquiry that was made aside from ‘‘The WITNESS [the partner attorney]: Yes. mine the Rules of its Proceedings, punish its Mem- the materials that were submitted with the com- I would agree with that characterization.’’ bers for disorderly Behavior, and, with the Concur- plaint, some of which were also submitted with the (Baran Tr. at 59). rence of two thirds, expel a Member.’’ October 31st letter. Aside from that and Mr. Respondent’s own testimony before this 10 See, In re Rep. Edward D. Holbrook (ID), II Hinds Eisenach talking to you, perhaps Mr. Gaylord, and Committee similarly endorses this version of § 1305 (1869); In re Rep. John T. Deweese (NC), II looking at the tapes, was there any factual inquiry events: Hinds § 1239 (1870). that you know of done by you or anyone at your of- ‘‘. . . After reviewing my testimony, my 11 See, House Ethics Manual, 102nd Cong., 2nd fice to prepare the portions of the letters concerning counsel’s testimony, and the testimony of Sess., April 1992 at 13–14 (collecting cases in which the course? Rule 43(1) has been invoked in investigating or dis- his two associates, the ball appears to have A. Well, whatever review occurred subsequently by ciplining Members ). others. been dropped between my staff and my coun- 12 Theresa A. Gabaldon, ‘‘The Self-Regulation of Q. But you don’t know what that was? sel regarding the investigation and verifica- Congressional Ethics: Substance and Structure,’’ 48 A. That is correct. I cannot confirm that today. tion of the responses submitted to the com- Admin. L. Rev. 39, 54–55 (1996) (quoting ABA Com- (Baran Tr. at 48). mittee. mittee on Government Standards (Cynthia Farina ‘‘As I testified, I erroneously, it turns out, Reporter), ‘‘Keeping Faith: Government Ethics and THE GINGRICH ETHICS CASE: EXCERPTS FROM relied on others to verify the accuracy of the Government Ethics Regulation,’’ 45 Admin. L. Rev. THE COUNSEL FOR THE HOUSE SPEAKER statements and responses. This did not hap- 287, 297 (1993)). 13 The House Ethics Manual relied upon for guid- [From the Washington Post, Jan. 18, 1997— pen. As my counsel’s testimony indicates, ance by Members provides: ‘‘The Committee has Federal News Service] there was no detailed discussion with me re- granted a blanket exception to [5 U.S.C.] section 7353 garding the submissions before they were to allow Members and employees of the House to so- Following are excerpts from the statement sent to the committee. Nonetheless, I bear licit funds on behalf of charitable organizations, to the House ethics committee of J. Ran- responsibility for them, and I again apolo- provided that no official resources are used, no offi- dolph Evans, counsel for House Speaker gize to the committee for what was an inad- cial endorsements is implied, and no direct personal Newt Gingrich (R. Ga). vertent and embarrassing breakdown.’’ benefit results. ‘‘House Ethics Manual at 319 (footnote omitted). Let me begin by saying that we recognize (Gingrich Tr., 12/10/96, at 5–6). 14 ‘‘Another Ethical Problem for Newt, The News and the speaker recognizes the serious na- Upon realizing that errors were made, Tribune, December 2, 1995, at A9. ture of the charges that are contained in the Speaker Gingrich has openly and publicly ac- 15 ‘‘FEC Says GOPAC Aided Gingrich Race Despite Statement of Alleged Violation, and recog- cepted responsibility for these errors and has Law; Group Barred From Federal Campaigns in nizes the seriousness of his admission to the offered his sincere apologies to this Commit- 1990,’’ Washington Post, November 30, 1995, at A1. violation contained in the Statement of Al- 16 tee and the House. ‘‘GOPAC secretly aided Gingrich in 1990, election leged Violation. Any charge against a mem- officials charge,’’ The Commercial Appeal (Mem- Notwithstanding these circumstances, the ber of Congress is a serious matter. Any bottom line is that inaccurate, incomplete phis), November 30, 1995, at 1A. 17 Gabaldon, supra, at 57. charge involving the speaker of the Congress and unreliable information was submitted to 18 See, In re Del. Fofo I.F. Sunia (Am. Sam.) and is indeed a serious matter, especially when it the Committee. There are no circumstances aide Matthew K. Iuli, See, Summary of Activities of is leveled against a member who has so con- which can justify the submission of inac- 100th Cong., H. Rep. No. 100–1125, at 15–16 (1989); In re sistently over the years proactively involved curate, incomplete or unreliable information Rep. Frederick W. Richmond (NY), See, Summary of himself in the issue of ethics, including pur- to the Committee. The information submit- Activities, 97th Cong., H. Rep. No. 97–1004 (1982). suing sanctions against members of his own 19 See, e.g., In re Del. Fofo I.F. Sunia (Am. Sam.) ted was submitted on Respondent’s behalf. party where he deemed appropriate. Respondent has accepted full responsibility. and aide Matthew K. Iuli, See Summary of Activi- Respectfully submitted, this 16th day of ties, 100th Cong., H. Rep. No. 100–1125, at 15–16 (1989) Nonetheless, we do recognize and the (disciplinary hearing scheduled after Member and speaker recognizes how serious this issue is. January, 1997. aide pleaded guilty to conspiracy to defraud govern- J. RANDOLPH EVANS, In fact, in connection with this process, the ment, although both resigned before hearings held); speaker has cooperated fully and completely Counsel for Respond- In re Rep. Mario Biaggi (NY), H. Rep. No. 100–506, ent. 100th Cong., 2d Sess. (disciplinary hearing held after with the investigative subcommittee in all ED BETHUNE, conviction for accepting illegal gratuities). phases, including waiving privileges with his Co-Counsel for Re- 20 ‘‘I would also ask the committee to place this counsel, producing thousands of documents, spondent. error in the context of our proactive effort in 1993 to attending meetings with the subcommittee seek the committee’s advice and approval and the at the subcommittee’s convenience, and di- letter from the former committee counsel, Dave FOOTNOTES recting his staff and counsel to cooperate McCarthy, confirming that I had aggressively with the subcommittee at every phase. 1 Contributing to the preparation of this report sought to explore any complications that would in- were Anthony W. Morris, Esq. and Stefan C. volve GOPAC. At no time did I intend to deceive the Indeed, the speaker himself has apologized Passantino, Esq. of Arnall, Golden & Gregory, L.L.P. committee or in any way be less than forthright.’’ to the subcommittee, to the House, and to and Shannon H. Ratliff, Esq. of Bracewell & Patter- (Gingrich Tr. at 6–7). the American people for the public con- son, L.L.P. 21 The staff member’s repeated testimony in this troversy that has ensued from the activities 2 Charitable, religious and educational entities or- regard was as follows: ganized under section 501(c)(3) and lobbying entities Q. Did you look over the document to check it for that are described in the Statement of Al- organized under section 501(c)(4) are exempt from accuracy? leged Violation. . . . taxation under the tax code. IRC § 501(a). A. Yes. In addition, the speaker has agreed to the 3 In fact, qualified tax experts in the field have Q. Factual accuracy? recommended level of sanction which Mr. concluded that there has been no violation of federal A. Primarily I would have been looking at this Cole has described. In connection with that, tax law. Highly regarded 501(c)(3) expert William J. document for typographical errors, misspelled Lehrfeld concluded there is no violation of federal words. [co-counsel] Ed Bethune and I . . . have spent tax laws. See, Exhibit E. James P. Holden of the law Q. Did you have any knowledge of the facts that a great deal of time reviewing the various in- firm of Steptoe & Johnson reached the same conclu- are contained in this document, the December 8, formation that has been made available to sion. See, Appendix C. 1994, letter? us. . . . And our recommendation is the same January 21, 1997 CONGRESSIONAL RECORD — HOUSE H189 recommendation as the recommendation of two organizations that share the same staff, materials relating to the vision, and I would the special counsel. the same facilities and other expenses. They ask that you would specifically take a look I should note that our recommendation is can conduct joint activities as long as there at the degree to which the movement always premised in part on the significant and im- is an allocation of the income and expenses. operated as an overall umbrella under which portant message that it sends in two re- This is not a new concept that has just sim- the other activities always fit. I do not be- spects: First, the submission of inaccurate, ply arose in connection with this particular lieve that there is any document that re- incomplete and unreliable information in the case. . . . flects a Republican majority as the overall course of any ethics investigation, regardless The idea that somehow what was occurring umbrella of the goal in which then, on the of the circumstances surrounding the sub- in 1992 and 1993 by the speaker in connection flip side, the movement was a part leading to mission, is serious and should be addressed with multiple entities was unusual or ex- the majority. . . . in a serious way. Second, the speaker feels traordinary or subject to serious question by As far as his violation of the tax law goes, strongly that when information, which is in- the Internal Revenue Service, all of those there are two possibilities that largely exist. accurate, incomplete or unreliable, causes which do not relate to the facts that the One . . . is that there was a violation of the the committee to expend resources, then the committee has found but relate to the envi- law, which the committee specifically did party submitting the information should ronment and the context of what was occur- not find, and that indeed the speaker, at the bear some responsibility for reimbursing the ring in the United States in 1992 and 1993, time that he engaged in this conduct, knew committee for some of the cost in addressing would reflect that those were consistent that it was a violation of law and thus acted that information. . . . with what at least 51 senators and 146 other improperly. That is an impossible conclusion We recommended the sanction be rep- House members were doing at the same time under this record. At best, the area of the rimand, a sanction which is relegated to seri- in connection with multiple entities. law is unsettled. The committee’s own tax ous violations. The speaker developed a movement. I counsel, in her reports to the [American Bar Speaker Gingrich has voluntarily agreed think in that regard it is important to note Association], indicates that it is unsettled that the committee will be reimbursed at the outset . . ., if you notice on Slide 32, and that the IRS precedent provides little $300,000 for costs incurred in connection with that he made it clear that the challenge in- guidance. the investigation of the inaccurate, incom- volved was not Republican or Democrat, lib- But more importantly, if you assume for a plete and unreliable information submitted eral or conservative; the challenge was to moment that the tax-law issue was clear to to the committee. We have recommended civilization’s survival. . . . What happened in the subcommittee’s tax counsel, it is equally that this reimbursement be included in any 1992 and 1993 and relating back as early as clear that the speaker’s tax counsel reached sanction that is recommended by the com- 1990, is Speaker Gingrich developed ideas on the opposite conclusion. The best that you mittee to the full House. . .. what he saw as necessary to renew American can say is, from all of the writing in the arti- NOT A REHASHING civilization. It extended well beyond the con- cles that existed at the time, is that the law cept—extended well beyond the concept of I should note that I agree with [Rep. Ben- was unclear. And if the law was unclear, any partisan political gain, but instead . . . jamin L.] Cardin [D–Md.] that the purpose of there is no way in which the speaker could extends to a fundamental concern about this hearing is not a rehashing of all the have understood what the law was and in- whether American civilization indeed is in facts that are contained in the special coun- tended to violate it. decay and decline. . . . The other possibility is that the speaker sel’s report. . . . [However] I disagree with was put on notice that there was a serious some of the conclusions and analysis that CHANGING CULTURAL DECLINE potential problem, and nonetheless, chose to are contained from those facts. . .. [T]o change cultural decline, there had to ignore it. . . . In addition to 51 senators and [W]hile certainly the facts are carefully be a cultural, economic, political, govern- 146 congressmen engaging in this kind of stated in the special counsel’s report, I think mental movement that transcended any gov- multiple-capacity structures, that the legal that they are often stated in a way which ig- ernment, any business, any educational in- writings at the time seemed to suggest that nores the realities and the context in which stitutions, specifically including the Con- the course, specifically Gingrich’s course, fit the events that are being described was oc- gress. . . . As part of the government, he was within acceptable parameters at the curring. . . . convinced that it required . . . that there be time. . . . [The] Statement of Alleged Violation es- a majority committed to reform. . . . In con- [Y]ou will see . . . citations that equally sentially consists of two parts. The first part nection with that there were three things make it clear that the writings at the time, consists of an alleged violation that the that occurred. There was the whip’s office; the legal periodicals at the time, reflected speaker failed to seek and follow the legal and his congressional office; there was the the multiple-structure process. advice that is described within the State- 501 (c)(3) organizations; and then there was I would also note to consider in connection ment of Alleged Violation. Second, the GOPAC. . . . All three served distinct pur- with deciding the appropriate level of sanc- Statement of Alleged Violation refers to in- poses. tion, that the speaker specifically addressed formation that was transmitted to the com- The purpose of the whip’s office was the issue of GOPAC involvement and fund- mittee on the speaker’s behalf on two sepa- through votes and legislation, to cause the raising in a meeting with David McCarthy rate occasions. movement to occur. Through the 501 (c)(3), who was committee counsel to the ethics I would like to emphasize . . . the speaker there was the focus to educate and reform committee. You will note that . . . Mr. was not charged with violation of U.S. tax ideas necessary for a movement to occur. McCarthy . . . pretty much articulated laws. The speaker was not charged with in- And through GOPAC was to recruit and train standards that . . . the tax-deductible status tending to deceive the committee. The Republican candidates. All of these then would turn not . . . on who did the fund-rais- speaker was not charged with illegal activi- were to cause a movement to occur. . .. ing, but on how the funds were stacked, and ties or criminal tax violations. The speaker It is not without question that both that the educational nature of the course was not charged with money laundering. . .. achieved Renewing American Civilization, spoke for itself. . . . We can only conclude that not only did the but it is not inconsistent that they would It is in that context that I ask you to place Statement of Alleged Violation not charge have the same goal, the only difference being the activities surrounding Renewing Amer- any of those items, but there was no reason that while the movement itself would pre- ican Civilization and the American Opportu- to believe that illegal or criminal or other suppose a majority considered—committed— nities Workshop. such activities occurred. to reform, that GOPAC would want that ma- Second, I think it is important to place jority to be Republican. ISSUE OF THE LETTERS this in the context of what was happening in Those are not inconsistent, and I’d think If I could now turn my attention to the 1991 and 1992 and 1993. . . . [T]he House Eth- even Mr. Cole would concede . . . that it is issue of the letters that were submitted to ics Manual specifically contemplates mul- not inappropriate . . . for a political action the committee. . . . tiple capacities involving . . . members of committee to in fact use and disseminate in- In May 1993, the speaker delivered to the Congress. It specifically talks about the dif- formation that has been developed by a committee a letter regarding participation ference between office accounts, official and 501(c)(3). . . . It is important that that con- in the formulation of the course. He attached unofficial organizations and similar distinc- text of that movement be put in the perspec- his January 25, 1993, special order, in which tions involving multiple capacities. . .. tive of the same thing that occurs on a daily he outlined his vision for Renewing Amer- I would note that the Internal Revenue basis involving any number of 501(c)(3)’s, ican Civilization. Any suggestion that the Service itself has recognized on repeated oc- 501(c)(4)’s and PACs in Washington, D.C., or committee at the time was not aware of the casions that a number of 501(c)(3) organiza- across America. . . . vision of Renewing American Civilization as tions have related 501(c)(4) organizations [O]ne issue that appears to be in signifi- it extended, is simply incorrect, given that that can [conduct] political campaign activi- cant dispute is the issue of whether the goal the one hour special order speech was specifi- ties, usually through a [political action com- of what all was occurring in 1991, 1992, and cally attached to the letter. mittee]. . . . 1993 was a Republican majority, of which the In the spring of 1993, the speaker’s staff I would even note for the committee that movement was a part, or was the goal the met with David McCarthy, counsel for the in the continuing-education handbook that movement, of which a Republican majority committee, in which there are references to is provided to IRS field agents, they specifi- was a part. . . . [executive director Jeffrey] Eisenach’s iden- cally acknowledge that two organizations, I would ask that in that context, that you tity with GOPAC, and . . . the 501(c)(3) is- such as a 501(c)(3) and a 501(c)(4), can include would specifically take a look . . . at the sues. H190 CONGRESSIONAL RECORD — HOUSE January 21, 1997 It is important to note that in the connec- sponsibility for the preparation of the re- counsel Jan] Baran or anyone else connected tion with that letter, that Mr. McCarthy sponses to the committee’s inquiry of Octo- with this case to deceive the committee or to made it very clear . . . that the issue of ber 31, 1994. He began the process of a series provide anything but accurate information?’’ GOPAC’s involvement and the issue of the of nonstop meetings—steering committee Answer by the associate: ‘‘No.’’ tax-deductible status was not something meetings and other meetings—to begin the ‘‘Your assumption, then, is that you were within the committee’s jurisdiction transition process that followed the Novem- supposed to put together a correct statement and . . . of which the committee would not ber election. of the facts and submit it to us?’’ be particularly interested; that he said that In this regard, I find the conclusions of the Answer: ‘‘Absolutely. . . .’’ he thought the committee would stick by its special counsel’s reports, the characteriza- Question: ‘‘Well, did Mr. Gingrich ever ask position and not get involved in second- tions to be somewhat in error. . .. you to provide us any information that was guessing the IRS on its tax determinations THE BALL GOT DROPPED less than complete or that was misleading?’’ of tax-exempt status. Answer: ‘‘Absolutely not, although I have [I]t is simply an example of a situation I think it’s important to note that in fact to hesitate to use the word ‘absolutely.’ ’’ where, as the speaker put it, the ball got he discouraged . . . involvement of the eth- Mr. GOSS: ‘‘Do you have any knowledge dropped between the staff and between the ics committee in connection with the rela- that Mr. Gingrich was aware that any of the attorneys, about verifying the accuracy of tionship of GOPAC and 501(c)(3) status so information ... that we have talked about, at information. This is especially true given that the focus of the committee counsel’s in- the time those letters were submitted, were that the information that is inaccurate re- terest was on the distinction between office incomplete, misleading or inaccurate?’’ lates to information which was already in accounts and unofficial activities. So it’s Answer: ‘‘No.’’ the committee’s possession and which had against that backdrop that we then measure The testimony is consistent on this point. already been referred to some 92 times. the responses that were being submitted There is no evidence from any testimony That brings us to the March 27 letter, later. from any witness who in any way touched On July 21, there was a letter to the com- which was a letter that was signed by coun- any of the letters that there was any intent mittee that noted the involvement of the sel, and for which there is no real indication or attempt to submit inaccurate informa- 501(c)(3). I would again commend to you to of involvement by the speaker himself in tion. . . . read specifically the letter that references connection with it. . . . I would note to you I noted in reading the report, the conclu- the Kennesaw State Foundation and the fact that if I take the testimony at face value, sions of the report, that there are words that it was a 501(c)(3) entity. and that is that there were these erroneous which are . . . cleverly juxtaposed against On August 3, the committee issued its let- statements in the document, it should be put each other to lead to a conclusion which is ter noting its position in granting approval in some context. This was a 52-page letter. somewhat different than what the testimony to the course as outlined in the correspond- It had 31 exhibits. It had 235 pages. It was itself is. ence that had been submitted by the speaker prepared by an attorney after 140 hours. It I do not dispute the facts surrounding the and the information that had been submit- consisted of 1,131 lines, of which 18 are at letters. I don’t dispute the testimony that ted. issue. It was submitted to the speaker during surrounds the letters. Most importantly, the On September 7, 1994, the complaint was the last week of the . . . [first] 100 days [of speaker does not attempt in any way to offer filed by Speaker Gingrich’s opponent [Ben the new Republican-majority Congress]. The excuses relating to the letters, and it has Jones] in the general election. It references suggestion being that the speaker should been his consistent position, as opposed to at length GOPAC and its involvement and its have caught the . . . errors made by attor- that of mine of being the attorney here, to relationship to 501(c)(3). neys retained by him after 140 hours of a 52- put things in context for you, that the let- On October 4, Speaker Gingrich sent a let- page letter with 31 exhibits. Context is im- ters were his responsibility. They were sub- ter to the committee addressing the com- portant in understanding the nature of the mitted on his behalf. They are inaccurate. plaint. . . . [I]t says, ‘‘I would like to make allegations that have been made. . . . [T]he That is wrong. it abundantly clear that those who were paid speaker himself was not involved, and in fact It is wrong to submit inaccurate informa- for the course preparation were paid by ei- no effort was made to investigate the state- tion to the committee. He has accepted the ther the Kennesaw State Foundation, the ments by the attorneys at the time the let- complete responsibility for that and has Progress and Freedom Foundation, or ter was prepared. agreed to a serious sanction, that being of a GOPAC. . . .’’ I would note that I think there is a very reprimand with a reimbursement of $300,000. [T]here was no concealment that GOPAC good summary by [subcommittee Chairman The only thing I point out to you is from was participating in connection with the Porter J.] Goss [R-Fla.]: ‘‘Okay, I have only my perspective as the counsel that has re- preparation of the course and funding for the one little thought. We seem to have gotten viewed this, is that notwithstanding his posi- course. [T]hen there’s the October 31, 1994, in a situation where we know we have some tion, it is important to put that into context letter from the committee, which indicates information that is not everything we de- of what was actually transpiring at the time that the October 4th letter sufficiently an- sired it to be, and we are trying to track those letters were prepared. ... swered most of allegations raised in Mr. down why and how we got to that position. Mrs. JOHNSON of Connecticut. Mr. Jones’s complaint but then went on to note It seems that Mr. Gingrich was relying on Speaker, I yield such time as he may you and some other people to do the Decem- that there were a number of documents that consume to the gentleman from Ohio reflect the involvement of GOPAC and ber 8 letter, or his December 8 letter was GOPAC employees in developing and raising given to somebody else and they were to be [Mr. HOBSON]. the funds for the course. . . . [T]his is a shift supplemented by your firm. And your firm in (Mr. HOBSON asked and was given that occurs if you read the letters in succes- turn, by your testimony, you were relying permission to revise and extend his re- sion. Prior to this point, the focus of the pretty much on what that individual . . . was marks.) committee has squarely been on official and doing, and you were just checking it for le- Mr. HOBSON. Mr. Speaker, there has unofficial activities by a member of Con- galities rather than substance, would be sort been a lot of heated rhetoric and par- gress. At this point, the issue then becomes of the way I read your testimony; and that, tisanship in this case, as it has pro- raised relating to other issues. And if you therefore, the problem started on December 8 gressed. I think it is important that we put it in that context, you can see how the was further compounded on December 27 in letters fit together. I will note that that let- that letter because you used some of the ma- step back and focus on the case, exam- ter specifically referenced the involvement terial from the December 8 letter. Is that ine the specific charges contained in of GOPAC personnel, GOPAC fax machine, correct?’’ the statement of alleged violations. letterhead, addresses and other materials. ‘‘Yes, I agree with that characterization, The first charge is that the Speaker . . . Any suggestion that there was an effort which is, simply stated, is that the attorneys should have sought legal advice in his to conceal, or that the committee was un- became involved, they limited it to the uni- dealings with 501(c)3 organizations. The aware and the speaker was trying to take ad- verse of the information that they reviewed; second is that he gave inaccurate infor- vantage of that ignorance of GOPAC’s in- the December 8 letter was prepared; it was mation to the Select Committee on volvement, is simply directly refuted and erroneous; and then the problem was exacer- belied by the correspondence that exists in bated when the March 27 letter was submit- Ethics. Those are the charges; no more, connection with this matter. GOPAC’s in- ted, since no further investigation was done no less. volvement was clearly unequivocally known regarding it.’’ I turn to the Speaker’s response to throughout the process, being referenced by I think [Rep. Steven] Schiff’s [R-N.M.] these charges. He accepted the sub- name some 92 times. questions relating to this issue are particu- committee’s findings. He acknowledged If you then look at the time-line, you will larly important given . . . the innuendos that he should have consulted a law- see that then followed Election Day, which that . . . there was something further at issue yer, and that some of the information was November 8, 1994, at which the Repub- here in terms of an intent or scheme or plan he gave was incorrect. Since the licans captured a majority of the seats in the to deceive. Congress. The following day, the speaker Mr. Schiff asked this question: ‘‘Was there Speaker has accepted the alleged viola- began the process of transition, a hectic anything told to you that you heard directly tions, it was the job of the full commit- time. On November 15, 1994, he retained at- or indirectly, that indicated that it was the tee to determine an appropriate sanc- torneys to begin the process of assuming re- purpose of either the speaker or [Gingrich tion. January 21, 1997 CONGRESSIONAL RECORD — HOUSE H191 While the committee attempted to in this area, even two tax experts from much earlier had it not been for these work through this process there was all the same law firm. These different in- disruptions. But fortunately, due to kinds of rhetoric flying, from all sides, terpretations may give some justifica- the leadership of the Chair of the Se- of those not involved in the process. tion for Mr. GINGRICH’s actions, al- lect Committee on Ethics and the work Some called for the expulsion of the though I still believe and I believe now of the subcommittee, we are here. For Speaker, and may still do that, while that he should have consulted a tax the past 2 years, NANCY JOHNSON forced others called for a letter of reproval or lawyer. the committee to do its job. Rather even less. That may happen also. After reviewing the Speaker’s case than referring the tough issues to oth- In the end, the special counsel sub- and examining House precedents on ers to decide, she kept the committee mitted his report to the full commit- sanctions, I believe the sanction was on track and kept the pressure on the tee, and the committee supported and more harsh than the charges in the commit to resolve cases. NANCY JOHN- voted out an unprecedented sanction, case warrant. For the RECORD, I am SON, more than any other Member, has since there is no evidence that the submitting a memo which outlines the paid a heavy political price for her de- Speaker engaged in misconduct that rules and precedents on disciplinary termined service to the Select Commit- resulted in personal financial gain to sanctions. I believe a careful reading of tee on Ethics. This, in my opinion, is him. this memo supports my conclusion. absolutely totally unfair and her con- I would like to take a few moments But the Speaker accepted the charges stituents should understand the extent to discuss the counsel’s report. Mr. and the sanction against him. I believe of the partisan political forces working Cole was hired by the Select Commit- that it demonstrates to all of us and to against her. tee on Ethics as an investigator to lay the American public that he truly re- Despite the enormous pressures out the facts of the Speaker’s case. As gretted his actions and sends a message brought to bear against the Chair, the a member of the Select Committee on that the Speaker’s conduct should be Chair endured and pressed on to resolve Ethics, I understood that Mr. Cole was held to a particularly high standard, as this most difficult and contentious should every other Member’s. not hired to be a judge, nor a 501(c)3 case. But there is another message in this tax expert. In either case, it was my After 6 years, I am today leaving the for all of us as Members. The reim- Select Committee on Ethics with understanding he had no prior experi- bursement of $300,000 sets a new stand- ence. Rather, the resolution of prelimi- mixed emotions, as Mr. CARDIN also ard for the ethics process. Some may said. I think most of us getting off nary inquiry authorizing Mr. Cole’s disagree with that. It says that those employment specified that he was ap- agree. It troubles me that this case who create additional and unnecessary brought out the worst partisan rancor pointed to assist the subcommittee. work for the committee are going to and resulted in inappropriate actions of I am submitting for the RECORD the pay a price. This should also alert certain Members, but at the same time biography of B. John Williams, who those Members who trump up charge I am pleased that this case has been reserved as a judge on the U.S. Tax after charge and file frivolous com- solved in a bipartisan manner and we Court, and currently is in the Washing- plaints with the Select Committee on can move forward in the House and do ton law firm of Morgan, Lewis, and Ethics that they may be held to a simi- the work that the people sent us here Bockius, the very same law firm as Mr. lar monetary standard. Cole’s hired tax expert. There have been numerous allega- to do. In closing, as I stated earlier, I be- I am also submitting for the RECORD tions and charges filed against Mr. lieve the committee sanction was more a statement written by Mr. Williams GINGRICH over the past few years, and concerning the potential significance they have been investigated by the Se- harsh than the charges warranted but I of the American Campaign Academy lect Committee on Ethics and at an will vote for the resolution because it case, which he provided when he was enormous cost to the taxpayers. All of was the bipartisan decision reached by interviewed by the committee for the these cases have either been deemed the committee and agreed to by Mr. position of special counsel. minor or dismissed except for the cur- GINGRICH. The material referred to follows: I am going to read just a little bit rent issue. from that, but I have submitted the en- This leads me to believe that there is B. JOHN WILLIAMS, JR. tire statement as I have it for the an orchestrated effort by certain oppo- B. John Williams, Jr. is a partner in the Tax Section resident in the Washington, RECORD. sition forces, some even involving tax Mr. Williams’ quote: D.C., office. His practice focuses on federal exempt organizations to attack the tax controversies and litigation before the * * * there is an adage taught in the first Speaker. And the attacks did not stop U.S. Tax Court, U.S. Court of Federal year of law school that ‘‘hard cases make with the Speaker. For the first time in Claims, U.S. District Court, and the U.S. Cir- bad law.’’ American Campaign Academy my career on the committee, there has cuit Courts of Appeal. He also represents cli- seems to be a good example of that adage. been a relentless attack on members ents before the Internal Revenue Service and While the case reached the right result be- who serve on the Select Committee on the Treasury Department on rulings and reg- cause of the integral closeness of the Acad- Ethics, including myself. I have served ulations. emy and the Republican Party sponsorship on the Select Committee on Ethics for Mr. Williams, who is vice-chairman of the and direction, the reasoning of the case Tax Section, represented and continues to reaches the result by focusing heavily on a 6 long years. It was not until we han- represent clients in a variety of fields, in- vague term that the Court called ‘‘secondary dled the Speaker’s case that I experi- cluding the oil, coal, newspaper, consumer benefit.’’ The ‘‘secondary benefit’’ of the enced and saw the attacks on members products and construction industries. Academy’s program was the benefit to em- of the Select Committee on Ethics From 1981 through 1984, Mr. Williams ployers—Republican candidates—of the from other Members and outside served as Special Assistant to the Chief training period acquired by academy grad- groups which, I might my add, by the Counsel of the Internal Revenue Service, and uates. way also included certain tax exempt as Deputy Assistant Attorney General, Tax The court found the secondary benefit dis- groups. Division, in the Department of Justice (su- proportionately benefited Republicans as Intense political pressure was pervising five civil trial sections, the Office they were the only ones hiring the grad- of Legislation and Policy, and the Review uates. The court’s reasoning really plows un- brought to bear on the members purely Section). charted waters and leaves only ill-defined for the reason that they served on the In 1985, Mr. Williams, then a partner at notions of how to access whether recipients Select Committee on Ethics. These and Morgan Lewis was appointed by President of the secondary benefits serve the organiza- other distractions were detrimental to Ronald Reagan to the U.S. Tax Court. He tion’s exempt educational purposes. the entire process. Had these actions served with distinction on the bench where and certain other committee problems he wrote many important opinions and tried b 1315 not occurred, this case could have been several highly complex factual cases involv- My purpose for submitting Mr. Wil- resolved much earlier and been far less ing hundreds of millions of dollars in dispute and where he served on the Court’s Rules liams’ statement is not to point out disruptive to the House and the Amer- who is right or who is wrong but, rath- Committee. In March, 1990, he resigned from ican people. Fortunately that is all be- the Tax Court and re-entered the practice of er, to point out that knowledgeable hind us and we are here today. law as a partner with Morgan Lewis. people on tax issues can and will have This has been a long and difficult Mr. Williams speaks regularly before busi- different interpretations about the law case and would have been completed ness and bar groups on litigating large tax H192 CONGRESSIONAL RECORD — HOUSE January 21, 1997 cases. He has served as a panel member of If this Committee were to investigate the violation bears upon the exercise or hold- the ALI–ABA Course of Study, ‘‘How to Han- whether the colleges’ exempt purposes were ing of such right, power, privilege, or immu- dle a Tax Controversy at the IRS and in served, delicate issues arise which the Com- nity.’’ Court;’’ the Georgetown CLE program, ‘‘The mittee will most likely not be in a position Rule 20(g) also states that the above stand- Perfect Trial of a Tax Court Case;’’ and the to assess, e.g., whether ‘‘conservative’’ or ards comprise only ‘‘general guidelines’’ and Tax Executives Institute’s seminar on ‘‘liberal’’ viewpoints can be equated with do ‘‘not limit the authority of the Commit- ‘‘Strategies for Success: How to Handle an partisan positions, whether the self-selection tee to recommend other sanctions.’’ IRS Audit.’’ of an audience can constitute a cognizable II. PRECEDENT REGARDING SANCTIONS Mr. Williams is a member of the District of group that can be said to receive a private Outlined below, in escalating categories of Columbia and Pennsylvania bars, the Amer- benefit (or whether the possibility that some ican Law Institute and the American Bar As- severity, are precedents regarding sanctions in the audidence will be motivated to join recommendations by the Committee since sociation. He served as a member of the Ad- conservative or liberal causes entails a pri- visory Committee to the U.S. Court of Ap- 1967, when the Committee on Standards of vate benefit to a political party), or whether Official Conduct was established as a stand- peals for the Federal Circuit (1992–96). Mr. a tax exempt institution of higher learning Williams is noted in Who’s Who in America, ing committee of the House. Pursuant to with an established educational program House Rules, the memorandum omits men- Who’s Who in American Law and Best Lawyers loses its exempt status by presenting a polit- in America. He is a Fellow of the American tion of any case concerning a current House ical figure who offers definite views and is member. College of Tax Counsel. funded by designated contributions. These is- He received his undergraduate degree from A. Letter of reproval sues were not the subject of American Cam- George Washington University with distinc- paign Academy and to apply that case as if 1. In re Rep. Jim Bates, H. Rep. No. 101–293, tion and university honors and with depart- it were applicable precedent will not, in my 101st Cong., 1st Sess. (1989). mental honors in history; he is a member of In connection with allegations that Mem- view, answer the questions before the Com- Phi Beta Kappa and Omicron Delta Kappa. ber sexually harassed female staff in viola- mittee or serve its best interests. Mr. Williams received his law degree with tion of House Rule XLIII, Clause 9, Commit- distinction from George Washington Univer- [Memorandum] tee issued public letter of reproval directing sity where he was a member of the law re- To: Members of the House of Representa- Member to apologize to former staff. (The view. He served for two years as a law clerk tives. House took no action.) for the late Judge Bruce M. Forrester of the From: David L. Hobson, Member of Congress. 2. In re Rep. Charlie G. Rose, III, H. Rep. U.S. Tax Court. Date: January 21, 1997. No. 101–526, 100th Cong., 2d Sess. (1988). In examining the relationship between Subject: Rules and Precedents Regarding In connection with allegations that Mem- GOPAC funding and the course taught by Mr. Disciplinary Sanctions. ber borrowed campaign funds for personal Gingrich at tax exempt colleges, and taped I. LEGAL AUTHORITY TO IMPOSE DISCIPLINARY use in violation of House Rule XLIII, Clause for later broadcast distribution, the Commit- SANCTIONS 6, and filed an inadequate Financial Disclo- tee has asked about the potential signifi- sure Statement in violation of House Rule cance of American Campaign Academy, 92 The U.S. Constitution expressly authorizes the House to discipline its Members. Section XLIV, the Committee adopted a Statement T.C. 1053 (1989). In my view this case offers of Alleged Violation and issued a public let- uncertain guidance to the Committee at 5, Clause 2 of Article I states that each House ‘‘may punish its Members for disorderly Be- ter of reproval. (The Member subsequently best. repaid the funds and amended his Financial First, the task before the Committee is to havior, and, with the concurrence of two thirds, expel a Member.’’ House Rule X, Disclosure Statement.) judge the propriety of Mr. Gingrich’s behav- 3. In re Rep. Richard H. Stallings, H. Rep. ior, whereas the case has direct application Clause 4(e), authorizes the Committee on Standards of Official Conduct to investigate No. 100–382, 100th Cong., 1st Sess. (1987). only to an issue about the exempt status of In connection with allegations that Mem- the colleges at which he taught his course. any alleged violation by a Member of ‘‘the Code of Official Conduct or of any law, rule, ber borrowed from his campaign fund for The case simply does not articulate any himself and a member of his staff, the Com- principle that would condemn or exonerate regulation, or other standard of conduct applicable to the conduct of such Mem- mittee investigated and issued a public let- the presentation of Mr. Gingrich’s course ter of reproval. content. Further, the case does not provide ber. . . .’’ House Rule X, Clause 4(e) also au- any standard for determining the propriety thorizes the Committee ‘‘to recommend to B. Reprimand of Mr. Gingrich’s teaching a course, even if the House from time to time such adminis- 1. In re Rep. Austin J. Murphy, H. Rep. No. partisan in content, at a tax exempt institu- trative actions as it may deem appropriate 100–485, 100th Cong., 1st Sess. (1987). tion of higher learning. Finally, the case to establish or enforce standards of official Following an investigation and discipli- does not provide standards for condemning conduct for Members. . . .’’ nary hearing, Committee recommended rep- or exonerating the funding of the course by Committee Rule 20(e) states: rimand regarding allegations that Member: GOPAC. Assuming Mr. Gingrich’s course was With respect to any proved counts against allowed another person to cast his House partisan, and designed to be so, and further a Member of the House of Representatives, vote in violation of House Rule VIII, Clause assuming that GOPAC provided funds for the the Committee may recommend to the 1; permitted his former law firm access to of- course, American Campaign Academy would House one or more of the following sanc- ficial resources in violation of 31 U.S.C. apply, if at all, only to determining whether tions: § 1301(a), and Paragraph 5 of the Code of Eth- ‘‘no more than an insubstantial part’’ of the (1) Expulsion from the House of Represent- ics for Government Service; and maintained colleges’ activities furthered a ‘‘nonexempt atives. an employee on a committee payroll who purpose.’’ In this exercise, which seems inap- (2) Censure. was not performing duties commensurate (3) Reprimand. with the employer’s pay, in violation of propriate for the Committee, the issue would (4) Fine. require an examination of the colleges’ edu- (5) Denial or limitation of any right, House Rule XLIII, Clause 8. The House rep- cational operations and a determination that power, privilege, or immunity of the Member rimanded the Member. any private benefits conferred were more if under the Constitution the House of Rep- 2. In re Rep. George Hansen, H. Rep. No. 98– than an incidental part of the colleges’ ac- resentatives may impose such denial or limi- 891, 98th Cong., 2d Sess. (1984). Following a criminal conviction for mak- tivities and purposes. tation. Second, there is an adage taught in the (6) Any other sanction determined by the ing false statements on Financial Disclosure first year of law school that ‘‘hard cases Committee to be appropriate. Statement in violation of 18 U.S.C. § 1001, make bad law.’’ American Campaign Acad- Alternatively, the Committee may issue a Committee held inquiry and disciplinary emy seems to be a good example of that Letter of Reproval without obtaining the ap- proceeding regarding violation of House Rule adage. While the case reached the right reproval of the House if, pursuant to Commit- XLIV. Committee recommended reprimand, sult because of the integral closeness of the tee Rule 20(d), it determines that such a let- and the House concurred. Academy and Republican Party sponsorship ter ‘‘constitutes sufficient action. . . .’’ 4. In re Rep. Daniel B. Crane, H. Rep. No. and direction, the reasoning of the case Committee Rule 20(g) provides the follow- 98–296, 98th Cong., 1st Sess. (1983). reaches the result by focussing heavily on a ing guidance regarding the appropriateness In connection with allegations that Mem- vague term that the Court called ‘‘secondary of the different types of sanctions: ber had an improper sexual relationship with benefit’’. The ‘‘secondary benefit’’ of the A reprimand is appropriate for ‘‘serious a House page in violation of House Rule Academy’s program was the benefit to em- violations.’’ XLIII, Clause 1, the Committee conducted an ployers (Republican candidates) of the train- Censure is appropriate for ‘‘more serious investigation and recommended a reprimand. ing acquired by Academy graduates. The violations.’’ The House voted to censure the Member. Court found the ‘‘secondary benefit’’ dis- Expulsion is appropriate for ‘‘the most se- 5. In re Rep. Gerry E. Studds, H. Rep. No. proportionately benefited Republicans (they rious violations.’’ 98–295, 98th Cong., 1st Sess. (1983). were the only ones hiring the graduates). A monetary fine is ‘‘appropriate in a case Committee recommended reprimand fol- The Court’s reasoning really plows unin which it is likely that the violation was lowing investigation of allegations that charted waters, and it leaves only ill-defined committed to secure a personal financial Member had an improper sexual relationship notions of how to assess the whether recipi- benefit.’’ with a House page in violation of House Rule ents of the ‘‘secondary benefits’’ serve the A denial or limitation of a right, power, XLIII, Clause 1. The House voted to censure organization’s exempt educational purposes. privilege, or immunity is appropriate ‘‘when the Member. January 21, 1997 CONGRESSIONAL RECORD — HOUSE H193 6. In re Rep. John J. McFall, H. Rep. No. Court subsequently found that Member’s ex- the Speaker. Indeed that was not our 95–1742, 95th Cong., 2d Sess. (1978). pulsion was unconstitutional. charge to the committee to find that, Committee adopted Statement of Alleged D. Expulsion and we did indeed not find it. But this Violation, held a public investigative hear- 1. In re Rep. Mario Biaggi, H. Rep. No. 100– ing, and recommended reprimand concerning was about power, so when we talk 506, 100th Cong., 2d Sess. (1988). about high ethical standard, it is not allegations that Member failed to report Following a criminal conviction, the Com- campaign contribution by Tongsun Park in mittee unanimously recommended expulsion just about money; it is about what violation of House Rule XLIII, Clause 1. The in connection with charges that the Member: Members will do for power. House reprimanded the Member. accepted illegal gratuities in violation of 18 The second point is, the gentleman 7. In re Rep. Charles H. Wilson, H. Rep. No. U.S.C. § 201(g), House Rule XLIII, Clauses 1, 2, from Texas [Mr. SMITH] and the gen- 95–1741, 95th Cong., 2d Sess. (1978). and 4, and Paragraph 5 of the Code of Ethics tleman from Ohio [Mr. HOBSON] alluded In connection with allegation that Member for Government Service; and failed to report to other penalties for other violations made a false statement to the Committee gifts on Financial Disclosure Statements in of House rules. Those cases were concerning the receipt of funds from violation of House Rule XLIV. Tongsun Park, the Committee filed a State- House deferred action on expulsion resolu- brought to conclusion. Mr. GINGRICH ment of Alleged Violation, held a hearing, tion while Member defended against second admitted to these charges, thereby and recommended a reprimand. The House prosecution. The Member resigned from the freezing the record. We could possibly voted to reprimand the Member. (See discus- House. prove intent if we had the full process sion below.) 2. In re Rep. Raymond F. Lederer, H. Rep. gone through. So I want to make that 8. In re Rep. Robert L. F. Sikes, H. Rep. No. 97–110, 97th Cong., 1st Sess. (1981). distinction. No. 94–1364, 94th Cong., 2d Sess. (1976). Following a criminal conviction for brib- Mr. CARDIN. Mr. Speaker, I yield 7 Committee recommended reprimand con- ery arising out of the ‘‘ABSCAM’’ case, the cerning allegations that Member used his of- Committee held an inquiry and disciplinary minutes to the gentleman from Ohio fice to further his personal financial inter- hearing, and subsequently recommended ex- [Mr. SAWYER], a very distinguished ests in violation of Paragraph 5 of the Code pulsion, concerning allegations that the member of the Select Committee on of Ethics for Government Service and failed Member accepted money in return for prom- Ethics, who has contributed greatly to disclose stock holdings in violation of ising to use official influence, in violation of not only to this particular matter, to House Rule XVIV. The House voted to rep- House Rule XLIII, Clauses 1 through 3. The many matters before the Select Com- rimand the Member. Member resigned, and the House took no ac- mittee on Ethics. C. Censure tion. (Mr. SAWYER asked and was given 3. In re Rep. Michael J. Myers, H. Rep. No. As indicated above, the House voted for permission to revise and extend his re- censure in two 1983 cases (concerning Rep- 96–1387, 96th Cong., 2d Sess. (1980). Following a criminal conviction for brib- marks.) resentatives Crane and Studds) in which the Mr. SAWYER. Mr. Speaker, I thank Committee recommended a reprimand. Other ery arising out of the ‘‘ABSCAM’’ case, the cases resulting in censure are outlined Committee held an inquiry and disciplinary my colleague from Maryland for his below. hearing, and subsequently recommended ex- leadership in this matter and join in 1. In re Rep. Charles H. Wilson, H. Rep. No. pulsion, concerning allegations that the my colleagues in recognizing the work 96–930, 96th Cong., 2d Sess. (1980). Member accepted money in return for prom- of the subcommittee and the staff of Committee adopted Statement of Alleged ising to use official influence. The House ex- pelled the Member. the subcommittee in this difficult mat- Violation and recommended censure in con- ter. III. CASES CONCERNING FALSE STATEMENTS TO nection with allegations that Member: ac- Earlier this year, a lifelong friend of cepted gifts from a person with a direct in- THE COMMITTEE terest in legislation, in violation of House In light of Speaker Gingrich’s admission to mine was thrilled that his daughter on Rule XLIII, Clauses 1 and 4; and made per- the charges in the Statement of Alleged Vio- graduating law school was selected to sonal use of campaign funds, in violation of lation, the two 1978 cases concerning Rep- speak on behalf of her classmates in House Rule XLIII, Clause 6. The Member was resentatives Wilson and Roybal may be of terms of the kinds of things that they censured by the House. particular interest to Members of the House. had learned in the course of their time 2. In re Rep. Charles Diggs, H. Rep. No. 96– In the Roybal case, the Committee consid- together. She chose as her theme the 351, 96th Cong., 1st Sess. (1979). ered allegations that Representative Roybal nature of testimony. Following criminal convictions for mail received $1,000.00 in cash from Tungsun Park. Now, that is something that is cer- fraud (18 U.S.C. § 1341) and making false The Committee found by ‘‘clear and convinc- statements (18 U.S.C. § 1001), the Committee ing evidence’’ that Representative Roybal tainly familiar to law students and adopted Statement of Alleged Violation and knowingly gave false testimony when he de- lawyers. It is certainly familiar to all recommended censure concerning allegations nied under oath that he received a gift or of us who deal day in and day out with that Member inflated staff salaries to enable campaign contribution from Mr. Park, and testimony. But she was talking about him to pay his personal and congressional concluded that Representative Roybal’s false testimony of another kind. Her theme expenses. (Member apologized and agreed to testimony constituted a violation of House was centered on the idea that the lives make restitution.) The House unanimously Rule 43, Clause 1. In re Rep. Edward J. Roy- we lead, the sum of our actions is testi- voted to censure the Member. bal, H. Rep. No. 95–1743, 95th Cong., 2d Sess. mony to the values that we hold. That 3. In re Rep. Edward J. Roybal, H. Rep. No. 1, 3–4 (1978). The Committee recommended 95–1743, 95th Cong., 2d Sess. (1978). that the House censure Representative Roy- it is testimony to the very definition of Committee adopted Statement of Alleged bal, but the House voted to reprimand him who we are as individual actors in our Violation, held public investigative hearing, instead. public and private lives and in our cor- and recommended censure in connection In the Wilson case, the Committee found porate life here together as an institu- with allegations that Member: failed to re- that Representative Wilson knowingly made tion. port campaign contributions in violation of a false statement to the Committee in writ- It is just such a matter that brings us House Rule XVIII, Clause 1; converted cam- ing when, in a response to a Committee ques- here today to judge that kind of testi- paign funds to personal use in violation of tionnaire sent to each Member of the House, mony, a year’s work, 150,000 pages of House Rule XVIII, Clause 6; and made a false Representative Wilson denied receiving any- statement to the Committee in violation of thing of value greater than $100.00 from documents and testimony, that are House Rule XVIII, Clause 1. The House sub- Tongsun Park. In re Rep. Charles H. Wilson, themselves testimony to the work of sequently voted to reprimand the Member. H. Rep. No. 95–1741, 95th Cong., 2d Sess. 1–3 the committee, to consider the serious- (See discussion below.) (1978). After a hearing, the Committee adopt- ness of the conduct that was before us, 4. In re Rep. Adam Clayton Powell, H. Rep. ed a Statement of Alleged Violation in which the absence of care that was exercised No. 27, 90th Cong., 1st Sess. (1967). it found, by clear and convincing evidence, in that conduct, the disruption that Special Select Committee considered alle- that Representative Wilson had violated gations that Member used committee travel has been caused to this institution, and House Rule 43, Clause 1. Id. at 4–5. The Com- the cost in both monetary and ethical funds for personal travel, improperly author- mittee recommended to the House that Rep- ized clerk hire payments to his wife, and resentative Wilson be reprimanded, and the terms and the repetitive nature of the committed contempt of court by failing to House adopted that recommendation. conduct that we speak of today. comply with New York state court orders. Mr. CARDIN. Mr. Speaker, I yield 30 The subcommittee concluded that Special Select Committee recommended seconds to the gentlewoman from Cali- there were significant and substantial that Member be seated but deprived of his se- warning signals to Mr. GINGRICH that niority, that he pay restitution for improp- fornia [Ms. PELOSI]. erly authorizing the expenditure of official Ms. PELOSI. Mr. Speaker, very he should have had prior to embarking funds, and that he be censured by the House. quickly I want to make two points. on that activity. The subcommittee House voted to exclude Member, imposed a Our colleagues have talked about and the full committee and we today fine, and denied him seniority. U.S. Supreme this not being about financial gain to were faced with a disturbing choice. H194 CONGRESSIONAL RECORD — HOUSE January 21, 1997

That choice was that either Mr. GING- us all, to act on them in our lives, to less in his activities. I want to address RICH did not seek appropriate advice in have the decency to face up to the per- that head on. the action that he took or that he was sonal responsibility and to let all of b 1330 reckless in not taking care that as a our lives, not just the Speaker from Member of Congress he made sure that this point forward become testimony I spoke yesterday with the chairman his action conformed with the law that to the high standards we set for our- of the American Bar Association tax he faced. We face another disturbing selves in the public arena. committee. He is the successor to the individual who served as the tax con- choice, that Mr. GINGRICH either inten- Mrs. JOHNSON of Connecticut. Mr. sultant to the Ethics Committee. He tionally misrepresented the truth or, Speaker, I yield 13⁄4 minutes to the gen- again, that he was reckless in his dis- tleman from Maryland [Mr. told me about a recent meeting that had been held by this tax committee, regard for the nature of truth. GILCHREST]. This is at the heart of the charges Mr. GILCHREST. Mr. Speaker, I which was attended by 75 to 80 attor- that are before us. This is a serious of- thank the gentlewoman for yielding me neys. And this meeting occurred on fense. It is a serious sanction. But I the time. January the 10th of this year. He said hasten to add that it does not raise the I would like to embark on a slightly there was much discussion about the hurdle that is before us. Twenty years different dimension here, and I would facts of the case that are before us ago in the consideration of the Korean hope that all the Members would listen today, but he said, ‘‘there was no con- Influence Investigation, the ethics as to my observation of the Speaker, clusion.’’ In fact, he said, ‘‘in regard to the dis- committee produced a manual of of- what has NEWT GINGRICH done in my cussion of the facts, it was not conclu- fenses and procedures and concluded mind over the years, especially the last sive.’’ There were many different con- that, even where serious criminal sanc- 2 years as Speaker of the House of Rep- clusions. He himself went on to say tions are imposed, the law does not in- resentatives. The Speaker has created that it was, ‘‘a stretch to conclude that sist on proof of actual knowledge. a situation on the House floor where the Speaker was guilty of violating any The courts have often held that proof each Member of Congress can become a tax laws.’’ that the accused acted in reckless dis- responsible advocate for his or her po- My point here is that the tax laws regard of the facts or deliberately sition. are so unclear that, in regard to what closed his eyes to avoid obtaining My first 4 years here, I saw money the Speaker was allegedly doing, how knowledge may suffice to support a and seniority as the influencing factor in the world could anyone have in- conviction if the circumstances should in developing legislation. The Speaker, tended to violate such laws or been have alerted a responsible Member con- in my observation, changed that. Those reckless in regard to such laws. cerned about both the letter and spirit with credibility have information, and Last, I want to say that in the con- of the law to hesitate to inquire before those with information generated as a clusion of the report of the special acting, the failure of a Member to learn result of that information influence. counsel, several explanations are men- the truth should not be an excuse, and That is how a democracy is supposed to tioned to justify the severity of the then goes on to discuss that that fail- work. Those with the information have penalty that is being discussed today. ure to adhere to this higher standard is the influence, the course, the direction One of those explanations given for jus- an appropriate basis for imposing the of the legislation. tification is that ‘‘Politics and tax de- most severe sanctions available to this As a result of that, the sophistication ductible contributions are an explosive House. of the debate in my judgment has risen mix.’’ Well, of course, there is nothing As we consider all of this, I hope that very, very high, a more open and hon- new about that. we recognize that, although we have est exchange of ideas, not pummeled by Another explanation is that the heard often that this is a sad day, I political punishment by seniority or Speaker had taken an aggressive ap- want to add to that, as the gentleman power; but an exchange of ideas is what proach to the tax laws. Well, since from Florida [Mr. GOSS] suggested, democracy is all about. when have Members been penalized for that this can be a sound day if we can The debate has often been clearly taking an aggressive approach to any- draw lessons from this case, not just misunderstood as partisan politics or thing? Representative GINGRICH but all of us gridlock. This is democracy. It is dif- And last, it is said that Mr. GING- can draw lessons that ethical behavior, ficult. That exchange of ideas does not RICH’s own tax lawyer would have ad- as Ms. PELOSI suggested, is not some- take place in North Korea, Cuba, Iraq, vised him not to use a tax exempt orga- thing that we do when we are too busy. or someplace else. NEWT GINGRICH has nization. But lawyers are risk-averse. It represents the way we live our lives not aspired to power in this House or They are paid to be cautious. They are together, that ethics is not a matter of this country like many others in this worried about malpractice suits. If cutting corners or pressing for an un- place have done, buttressed by arro- they think there is 1 chance out of 100 fair advantage or that seeks to blur the gance, dogma, and ignorance. In my that their client might get in trouble, truth or that seeks to find an entre- judgment, in my observation, NEWT they are going to recommend against preneurial expression in the way we GINGRICH has sought to reveal his vi- that supposed action. conduct our business here but, rather, sion for America. This is what democ- The point here is that, just because ethical behavior may be even more im- racy is about. the Speaker did not consult an attor- portant to us all when the lines are Mrs. JOHNSON of Connecticut. Mr. ney, is that reckless? Is that reason blurred than when they are clear. Speaker, might I inquire as to the time enough to give him the severe penalty This is not a matter of personal gain remaining on both sides? of a reprimand? to the Speaker. It is a matter of ethical The SPEAKER pro tempore (Mr. BE- And, furthermore, let me end on a loss to us all if we do not recognize the REUTER). The gentlewoman from Con- question that I would pose to other importance of what is before us here necticut [Mrs. JOHNSON] has 93⁄4 min- Members of the House, and that is, Do today. We are all diminished by a vio- utes remaining, and the gentleman we want to be judged by the same lation of ethical standards, and we are from Maryland [Mr. CARDIN] has 8 min- standards that we are judging the all elevated by their careful and caring utes remaining. Speaker by today? observation. Mrs. JOHNSON of Connecticut. Mr. Mr. CARDIN. Mr. Speaker, I yield 1 In that sense, in conclusion, Mr. Speaker, I yield 3 minutes to the gen- minute to the distinguished gentleman Speaker, this can be a unique day. It tleman from Texas [Mr. SMITH]. from New York [MR. RANGEL]. will be in one sense the worst thing Mr. SMITH of Texas. Mr. Speaker, I (Mr. RANGEL asked and was given that we have ever done to a Speaker of thank the Chair again for yielding me permission to revise and extend his re- the House of Representatives. But it the time. marks.) can also be one of the very best things There has been much discussion this Mr. RANGEL. Mr. Speaker, I gather that ever happened in his life and in afternoon about the tax issues in this that most of the Members, Democrat fact in all of our lives if he and we take case. There has been an assertion made and Republican, are very anxious to the lessons of this day to heart, recog- that the Speaker supposedly intended put the heat and passion of our par- nize them as personal obligations for to violate tax laws or that he was reck- tisanship behind us and to get on and January 21, 1997 CONGRESSIONAL RECORD — HOUSE H195 legislate as the American people would work that the committee has put into What he is being charged with today want us to do. God knows I have con- this recommendation. But I must agree is during the process he happened to tributed my share toward that heat with my colleague from Texas, Mr. screw up. That is what is going on here. and passion, and make no apologies for SMITH, the only member of the com- I just find that really sad that we have my partisanship. But we cannot have it mittee who voted against that rec- abused the process like this. both ways. We cannot say that he pled ommendation. I believe that this pun- This Speaker has had every detail of guilty but he did not do anything. ishment is too harsh given the history his life examined under a microscope, For those people who want to pursue of the ethics process and the prece- and that microscope has exposed some outside issues, I beg them not to think dence of earlier punishments. flaws, some sloppiness, some things about doing it. If we want to inves- Such a punishment is not only un- that should have been done better; but tigate who was coercing members of precedented and can be levied on every it has not exposed corruption or law- the committee, then maybe we will in- one of us, it is unwarranted. I will not lessness or personal profit. And that is vestigate who asked them how they vote to reprimand NEWT GINGRICH for what reprimands and censures are all were going to vote on the question of transgressions that in the past have about. The highest possible standard the Speaker. only warranted either warnings or let- does not mean an impossible standard Who is talking about taxes? The Se- ters of reproval from the Committee on that no American could reach. lect Committee on Ethics had no right Standards of Official Conduct. Let us stop using the ethics process to go into tax issues. That is for the In- Now, I understand the Speaker’s for political vendettas. Let us not cre- ternal Revenue Service; that is for the noble motivation in working out a set- ate precedence that will only serve to Federal Bureau of Investigation, and tlement in this case, and I understand undermine the service of this country. they have the responsibility to do that. why and how the committee came to Let us stop this madness. Let us stop The Speaker is intelligent. He is an this end and the Speaker came to this the cannibalism. intellectual. He read the charges. He end; but we have to put it in perspec- Let us not fall victim to unrealistic said he brought discredit upon this tive. The gentleman from Missouri, the expectations that do not forgive the House. For God’s sake, let us get on minority leader, Mr. GEPHARDT, re- common flaws of normal Americans. with it. ceived a letter from the Committee on With all due respect to the great Mr. CARDIN. Mr. Speaker, I yield 1 Standards of Official Conduct for giv- work of the Ethics Committee, I can- minute to the distinguished gentleman ing false information to the committee not vote to reprimand the Speaker of from Ohio [Mr. TRAFICANT]. not intentionally. The chairman of the the House for the stated trans- Mr. TRAFICANT. Mr. Speaker, I sa- DCCC received a letter from this Com- gressions. lute the Republicans for their loyalty mittee on Standards of Official Con- Mr. CARDIN. Mr. Speaker, I yield to their Speaker and their unity. The duct because he did not intentionally myself the balance of my time. facts are clear, Democrats: 7 years ago use a Federal employee for campaign Mr. Speaker, I agree with the chair- the Democrats abandoned Jim Wright; purposes. woman of our committee. These are Those are letters of reproval, and I today the Republicans rescue NEWT very tough penalties, and the violation submit that both of those actions are GINGRICH. I commend them. of the rules justify these tough sanc- Let me say this. The bottom line, worse than what NEWT GINGRICH has tions. folks, is this is not Rotary; this is poli- owned up to. The sanctions are being rec- Now, for what kind of violations has tics. If Democrats are going to win ommended not because Mr. GINGRICH is this House put reprimands on Mem- back the majority, I think we should the Speaker of the House. They are bers? Hiring the wrong lawyer? Sub- being recommended because Mr. GING- not only do that but maybe expend a mitting or being sloppy about submis- RICH is a Member of this House. These little bit of time on creating jobs in the sions to the committee? No. Rep- sanctions would be appropriate for any country. It might serve a better pur- rimands have been used for things such Member of this House who committed pose. as using political influence to fix park- the violations that have now been es- I want to close today by commending ing tickets for personal friends; rep- tablished by the Committee on Stand- all of the leaders and all of the mem- rimands or recommendations of rep- ards of Official Conduct and have now bers of the committee. They are to be rimand by the committee for improper been admitted to by Mr. GINGRICH. commended. I will support their deci- sexual relationships with pages; rep- Mr. GINGRICH made a decision that sion. But let me say this: I hope that rimand for intentionally lying to the any Member has the right to make. He today’s events serve to bring some committee. form of historical fairness and perspec- This committee has not found this has admitted to the charges. He has tive to our fine former Democrat Speaker has intentionally lied or in- done that in order to avoid the neces- Speaker, Jim Wright. tentionally misled the committee. sity of a trial. That is his decision, and Mrs. JOHNSON of Connecticut. Mr. This is, I say to the gentlewoman one which I think we all must respect, Speaker, how much time is remaining? from California, Mr. Speaker, this is but the underlying facts as to why this The SPEAKER pro tempore [Mr. BE- about power. This is about some on sanction is so severe, I think, will be- REUTER]. The gentlewoman from Con- this side have lost power and they are come obvious to any one of us if we necticut [Mrs. JOHNSON] has 7 minutes trying to regain it by abusing the eth- will read the report of the special coun- remaining, and the gentleman from ics process and this institution. That is sel which now has been approved not Maryland [Mr. CARDIN] has 6 minutes what this is all about. only by the bipartisan investigative remaining. So, I do not agree that the Speaker committee but by the full Committee Mrs. JOHNSON of Connecticut. Mr. should be held to a higher standard. All on Standards of Official Conduct. Speaker, I yield 41⁄2 minutes to the gen- of us, all of us, every Member, should It points to the fact that this was not tleman from Texas [Mr. DELAY]. be held to the highest of standards. a college course. It was a course con- Mr. DELAY. Mr. Speaker, I thank the This Speaker and any other Member ceived within a political movement. chairman for giving me this time. should not be held to a double stand- Read pages 38 and 39. It was conceived Last week, Mr. Speaker, I was pre- ard. This is a double standard that we in a political movement. It was con- pared to vote for a reprimand, but then are imposing on this Speaker. ceived as the only way, according to I found out that it is more than a rep- In fact, we know it because this Mr. GINGRICH, to get the message out, rimand; it is now a reimbursement plus Speaker has been prodded and probed to get the political message out. a reprimand. And I cannot take what I from every direction. Since 1989 he has I appreciate the comments of my col- was going to take, a political decision, had over 500 ethics charges brought league from Maryland, Mr. GILCHREST, when I feel strongly, feel very strongly, against him. In the last 2 years he has but we do not use tax exempt organiza- that it is not right. had 74 ethics charges brought against tions to get a political message out. I Now, I have the greatest respect for him. You know what? Nothing has been appreciate the comments of the gen- the chairwoman of the Committee on brought to this floor to bring a sanc- tleman from Texas, Mr. SMITH, about Standards of Official Conduct, NANCY tion against anything that he has been the meeting of tax lawyers. In all due JOHNSON, and I appreciate all the hard charged with. respect, this report was just released 4 H196 CONGRESSIONAL RECORD — HOUSE January 21, 1997 days ago. The facts and circumstances constitutional responsibilities, to cost assessment, that is, the reimbursement of are just now known to the American judge the conduct of our own Members, $300,000 should be paid. people. The political motivation and and we have done that, and we have The reprimand for Congressman GINGRICH the action on that political motivation reached an agreement, and the agree- and the $300,000 cost assessment represent is now just known by the American ment is right, and Mr. GINGRICH has a serious penalty and one in which I concur. people. agreed on that assessment. Now it is However, while this resolution leaves repay- Mr. GINGRICH commingled tax ex- time for us to do right as a full House. ment to the Speaker's discretion, I personally empt organizations with his political It is time for us to support the rec- believe, and would advise, that payment be agenda. He did it because he could not ommendations of the Ethics Commit- made from the Speaker's personal funds and raise enough money in the political tee to send a very clear message that not from any political action committee or PAC’s. That is part of our record. This every Member of this House must ad- other campaign account. was a new way to raise money, a new here to the highest standards when it I would advise the Speaker that payment of avenue in which he could promise his comes to their personal conduct that this cost assessment from his personal funds contributors a tax exemption to boot. can bring discredit to this House and to would at least begin to rehabilitate this House That is wrong. He did it because he their conduct with the Ethics Commit- and the ethics process to which we are all ac- needed the money in order to get his tee and the information that they countable. political message out. And that is make available to our committee. wrong. I urge my colleagues to support this This vote today is conclusion of a sad chap- There is ample evidence here that tax recommendation. Let us approve it ter in the ethical history of the U.S. House. laws were violated, and it is not a close overwhelmingly and then, yes, let us With this vote, we should move beyond par- case, but we do not need to reach that get on with the business of this House, tisanship and attend with seriousness of pur- conclusion. As the special counsel’s re- Democrats and Republicans working pose and probity to the people's business in port concludes, this is a bipartisan con- together to do the people’s business. the highest tradition of American democracy. clusion, Mr. GINGRICH should have Mrs. JOHNSON of Connecticut. Mr. This is now our ethical challengeÐa chal- sought tax advice. The reason he did Speaker, I yield 1 minute to the gen- lenge upon which the public will ultimately not seek that tax advice was either tleman from New Mexico [Mr. SCHIFF]. judge us. that he knew it would be wrong and he Mr. SCHIFF. Mr. Speaker, I have to Mrs. JOHNSON of Connecticut. Mr. did not want to get that advice or he say that I do not think it is an accu- Speaker, I yield myself the balance of was reckless in his conduct. rate portrayal of the matters that my time. Make no mistake about this. This is bring us to the House floor today and Mr. Speaker, today we take final ac- reckless conduct, at least reckless con- that are about to bring us to a vote to tion on the Gingrich case. I believe pas- duct, over a long period of time dating selectively choose facts in a long inves- sage of the tough, unprecedented pen- back 5 years, involving four tax exempt tigative process. I cannot say that any- alty package is appropriate and I also organizations costing taxpayers hun- thing the gentleman from Maryland believe it can be one important step to- dreds of thousands of dollars of legiti- [Mr. CARDIN] just rendered was inac- ward restoring pride and confidence in mate tax needs. curate if taken by itself. But these the people’s House of the U.S. Con- But there is more to this case than things are not taken by themselves. gress. But as important as this vote is just the tax issues. We have letters Also in the special counsel’s report is today, no single vote can renew public that misled the Committee on Stand- the quotation of another tax expert confidence in this institution. Rather, ards of Official Conduct. As the special who said he did not think that there each Member of this House must take counsel has pointed out, there is ample was a violation of 501(c)3 laws in any personal responsibility to restore civil- evidence, there is significant evidence way. There was no abuse of the tax ity and mutual respect to our delibera- here that he intentionally did this. No, laws. It was his opinion that as long as tions. The American people are bone we do not reach that conclusion. The the content of the Speaker’s course as tired of partisanship. They want us to record was frozen by his admission. But a college course was pure of political work together, and I believe most we do reach the conclusion that this involvement, then anyone could use it Members of this House are yearning to was either intentional conduct to mis- anyway they wanted to, and not even return to the deliberative process that lead this House and the ethics process the worst critic of the Speaker we alone produces good public policy. We or it was reckless conduct. heard from challenged the fact that the were elected Republicans and Demo- Now, that is more than innocent mis- course itself contained no partisan di- crats but the core of democracy is takes. We have reached conclusions rectives to the class, that it was a le- building bipartisan consensus by ma- that these are not just innocent mis- gitimate college course. turing the best ideas from both parties takes. Mr. GINGRICH’s explanation that I urge the Members to adopt the rec- into responsible, effective solutions. he is sensitive to the ethics process, he ommendation of the committee. Today we conclude this case by impos- was embarrassed, and he came forward Mrs. JOHNSON of Connecticut. Mr. ing a heavy penalty on the leader of as soon as he knew they were in error, Speaker, I yield such time as she may this House. It is a tough penalty, unjust does not wash with the record that consume to the gentlewoman from New precedented and appropriate. But if our has been presented to you today. There Jersey [Mrs. ROUKEMA]. action fails today to chasten this body is more to it than that, and the special (Mrs. ROUKEMA asked and was and bring a halt to the crippling par- counsel’s record reflects that, and we given permission to revise and extend tisanship and animosity that has sur- need to take cognizance of that. her remarks.) rounded us, then we will have lost an So we have a series of conduct that Mrs. ROUKEMA. I thank the gentle- opportunity to grow and learn from was either reckless or intentional and woman for yielding me this time. this solemn occasion, and that would it cost this House and our reputation Mr. Speaker, I rise in strong support be a tragedy. dearly. That is why the sanction is be- of the Ethics Committee report. It is a fore us. serious and appropriate sanction. I I ask for your support of the biparti- urge that it have the same bipartisan san recommendation of the Ethics b 1345 support on the vote of this House. Committee. Not because he is Speaker of the Mr. Speaker, I support the report of the Mr. CARDIN. Mr. Speaker, I ask House but because a Member of the Committee on Standards of Official Conduct, unanimous consent that the report of House has brought disgrace to this the Ethics Committee, and urge its adoption the Select Committee on Ethics be Chamber. recognizing that it will close a sad chapter in made a part of the RECORD. I am proud of the fact that we have a the history of this House. This is a serious and The SPEAKER pro tempore (Mr. BE- bipartisan recommendation here today. an appropriate sanction, as stated by Rep- REUTER). Is there objection to the re- That is very important. The process resentative PORTER GOSS, the chairman of the quest of the gentleman from Maryland? has worked. Democrats and Repub- Investigative Subcommittee. However, left licans have come together and have unstated in this report and unresolved by the There was no objection. performed one of their most important committee is the means by which the fine or The report is as follows: January 21, 1997 CONGRESSIONAL RECORD — HOUSE H197 IN THE MATTER OF REPRESENTATIVE (4) Whether Representative Gingrich’s ac- liminary Inquiry. After receiving the discus- NEWT GINGRICH tivities on behalf of the Abraham Lincoln sion documents, the Subcommittee met to I. INTRODUCTION Opportunity Foundation violated its status discuss the legal and factual questions at A. Procedural Background under 501(c)(3) of the Internal Revenue Code issue. and related regulations or whether the Abra- In most investigations, people who were in- On September 7, 1994, a complaint was filed volved in the events under investigation are with the Committee on Standards of Official ham Lincoln Opportunity Foundation violated its status with the knowledge and ap- interviewed and asked to describe the events. Conduct (‘‘Committee’’) against Representa- This practice has some risk with respect to tive Newt Gingrich by Ben Jones, Mr. Ging- proval of Representative Gingrich (House the reliability of the evidence gathered be- rich’s opponent in his 1994 campaign for re- Rule 43, Cl. 1). cause, for example, memories fade and can election. The complaint centered on a course As discussed below, the Subcommittee is- change when a matter becomes controversial taught by Mr. Gingrich called ‘‘Renewing sued a Statement of Alleged Violation with and subject to an investigation. One advan- American Civilization.’’ Among other things, respect to the initial allegation pertaining tage the Subcommittee had in this investiga- the complaint alleged that Mr. Gingrich had to Renewing American Civilization and also tion was the availability of a vast body of used his congressional staff to work on the with respect to items 1 and 4 above. The Sub- documentation from multiple sources that course in violation of House Rules. The com- committee did not find any violations of had been created contemporaneously with plaint also alleged that Mr. Gingrich had House Rules in regard to the issues set forth the events under investigation. A number of created a college course under the sponsor- in items 2 and 3 above. The Subcommittee, ship of 501(c)(3) organizations in order ‘‘to however, decided to recommend that the full documents central to the analysis of the meet certain political, not educational, ob- Committee make available to the IRS docu- matter, in fact, had been written by Mr. jectives’’ and, therefore, caused a violation ments produced during the Preliminary In- Gingrich. Thus, the documents provided a of section 501(c)(3) of the Internal Revenue quiry for use in its ongoing inquiries of unique, contemporaneous view of people’s Code to occur. In partial support of the alle- 501(c)(3) organizations. In regard to item 3 purposes, motivations, and intentions with gation that the course was a partisan, politi- above, the Subcommittee decided to issue respect to the facts at issue. This Report re- cal project, the complaint alleged that the some advice to Members concerning the lies heavily, but not exclusively, on an anal- course was under the control of GOPAC, a proper use of outside consultants for official ysis of those documents to describe the acts, political action committee of which Mr. purposes. as well as Mr. Gingrich’s purpose, motiva- Gingrich was the General Chairman. On January 7, 1997, the House conveyed the tions, and intentions. Mr. Gingrich responded to this complaint matter of Representative Newt Gingrich to As the Report proceeds through the facts, in letters dated October 4, 1994, and Decem- the Select Committee on Ethics by its adop- there is discussion of conservative and Re- ber 8, 1994, but the matter was not resolved tion of clause 4(e)(3) of rule X, as contained publican political philosophy. The Commit- before the end of the 103rd Congress. On Jan- in House Resolution 5. tee and the Special Counsel, however, do not uary 26, 1995, Representative David Bonior On January 17, 1997, the Select Committee take any positions with respect to the valid- filed an amended version of the complaint on Ethics held a sanction hearing in the ity of this or any other political philosophy, originally filed by Mr. Jones. It restated the matter pursuant to committee rule 20. Fol- nor do they take any positions with respect allegations concerning the misuse of tax-ex- lowing the sanction hearing, the Select Com- to the desirability of the dissemination of empt organizations and contained additional mittee ordered a report to the House, by a this or any other political philosophy. Mr. allegations. Mr. Gingrich responded to that roll call vote of 7–1, recommending that Rep- Gingrich’s political philosophy and its dis- complaint in a letter from his counsel dated resentative Gingrich be reprimanded and or- semination is discussed only insofar as it is March 27, 1995. dered to reimburse the House for some of the necessary to examine the issues in this mat- On December 6, 1995, the Committee voted costs of the investigation in the amount of ter. to initiate a Preliminary Inquiry into the al- $300,000. The following Members voted aye: C. Summary of the Subcommittee’s Factual legations concerning the misuse of tax-ex- Mrs. Johnson of Connecticut, Mr. Goss, Mr. Findings empt organizations. The Committee ap- Schiff, Mr. Cardin, Ms. Pelosi, Mr. Borski, The Subcommittee found that in regard to pointed an Investigative Subcommittee and Mr. Sawyer. The following Member two projects, Mr. Gingrich engaged in activ- (‘‘Subcommittee’’) and instructed it to: devoted no: Mr. Smith of Texas. ity involving 501(c)(3) organizations that was termine if there is reason to believe that The adoption of this report by the House substantially motivated by partisan, politi- Representative Gingrich’s activities in rela- shall constitute such a reprimand and order cal goals. The Subcommittee also found that tion to the college course ‘‘Renewing Amer- of reimbursement. Accordingly, the Select Mr. Gingrich provided the Committee with ican Civilization’’ were in violation of sec- Committee recommends that the House material information about one of those tion 501(c)(3) or whether any foundation adopt a resolution in the following form. projects that was inaccurate, incomplete, qualified under section 501(c)(3), with respect HOUSE RESOLUTION — and unreliable. to the course, violated its status with the 1. AOW/ACTV knowledge and approval of Representative Resolved, That the House adopt the report Gingrich * * *. of the Select Committee on Ethics dated The first project was a television program The Committee also resolved to appoint a January 17, 1997, In the Matter of Represent- called the American Opportunities Workshop Special Counsel to assist in the Preliminary ative Newt Gingrich. (‘‘AOW’’). It took place in May 1990. The idea Inquiry. On December 22, 1995, the Commit- Statement Pursuant to Clause 2(l)(3)(A) of for this project came from Mr. Gingrich and tee appointed James M. Cole, a partner in Rule XI he was principally responsible for developing its message. AOW involved broadcasting a the law firm of Bryan Cave LLP, as the Spe- No oversight findings are considered perti- television program on the subject of various cial Counsel. Mr. Cole’s contract was signed nent. governmental issues. Mr. Gingrich hoped January 3, 1996, and he began his work. B. Investigative Process On September 26, 1996, the Subcommittee that this program would help create a ‘‘citi- announced that, in light of certain facts dis- The investigation of this matter began on zens’ movement.’’ Workshops were set up covered during the Preliminary Inquiry, the January 3, 1996, and lasted through Decem- throughout the country where people could investigation was being expanded to include ber 12, 1996. In the course of the investiga- gather to watch the program and be re- the following additional areas: tion, approximately 90 subpoenas or requests cruited for the citizens’ movement. While (1) Whether Representative Gingrich pro- for documents were issued, approximately the program was educational, the citizens’ vided accurate, reliable, and complete infor- 150,000 pages of documents were reviewed, movement was also considered a tool to re- mation concerning the course entitled ‘‘Re- and approximately 70 people were inter- cruit non-voters and people who were apoliti- newing American Civilization,’’ GOPAC’s reviewed. Most of the interviews were con- cal to the Republican Party. The program lationship to the course entitled ‘‘Renewing ducted by Mr. Cole outside the presence of was deliberately free of any references to Re- American Civilization,’’ or the Progress and the Subcommittee. A court reporter tran- publicans or partisan politics because Mr. Freedom Foundation in the course of com- scribed the interviews and the transcripts Gingrich believed such references would dis- municating with the Committee, directly or were made available to the Members of the suade the target audience of non-voters from through counsel (House Rule 43, Cl. 1); Subcommittee. Some of the interviews were becoming involved. (2) Whether Representative Gingrich’s re- conducted before the Members of the Sub- AOW started out as a project of GOPAC, a lationship with the Progress and Freedom committee primarily to explore the issue of political action committee dedicated to, Foundation, including but not limited to his whether Mr. Gingrich had provided the Com- among other things, achieving Republican involvement with the course entitled ‘‘Re- mittee, directly or through counsel, inac- control of the United States House of Rep- newing American Civilization,’’ violated the curate, unreliable, or incomplete informa- resentatives. Its methods for accomplishing foundation’s status under 501(c)(3) of the In- tion. this goal included the development and ar- ternal Revenue Code and related regulations During the Preliminary Inquiry, Mr. Cole ticulation of a political message and the dis- (House Rule 43, Cl. 1); interviewed Mr. Gingrich twice and Mr. semination of that message as widely as pos- (3) Whether Representative Gingrich’s use Gingrich appeared before the Subcommittee sible. One such avenue of dissemination was of the personnel and facilities of the twice. Several draft discussion documents, AOW. The program, however, consumed a Progress and Freedom Foundation con- with notebooks of exhibits, were prepared for substantial portion of GOPAC’s revenues. stituted a use of unofficial resources for offi- the Subcommittee in order to brief the Mem- Because of the expense, Mr. Gingrich and cial purposes (House Rule 45); and bers on the findings and status of the Pre- others at GOPAC decided to transfer the H198 CONGRESSIONAL RECORD — HOUSE January 21, 1997 project to a 501(c)(3) organization in order to sage via the course in that the message 3. FAILURE TO SEEK LEGAL ADVICE attract tax-deductible funding. The 501(c)(3) GOPAC had adopted and determined to be Under the Internal Revenue Code, a organization chosen was the Abraham Lin- the one that would help it achieve its goals 501(c)(3) organization must be operated ex- coln Opportunity Foundation (‘‘ALOF’’). was broadcast widely and at no cost to clusively for exempt purposes. The presence ALOF was dormant at the time and was re- GOPAC. of a single non-exempt purpose, if more than vived to sponsor AOW’s successor, American The course was taught at Kennesaw State insubstantial in nature, will destroy the ex- Citizens’ Television (‘‘ACTV’’). ALOF oper- College (‘‘KSC’’) in 1993 and at Reinhardt emption regardless of the number or impor- ated out of GOPAC’s offices. Virtually all its College in 1994 and 1995. Each course con- tance of truly exempt purposes. Conferring a officers and employers were simultaneously sisted of ten lectures and each lecture con- benefit on private interests is a non-exempt sisted of approximately four hours of class- GOPAC officers or employees. ACTV had the purpose. Under the Internal Revenue Code, a room instruction, for a total of forty hours. same educational aspects and partisan, polit- 501(c)(3) organization is also prohibited from Mr. Gingrich taught twenty hours of each ical goals as AOW. The principal difference intervening in a political campaign or pro- course and his co-teacher, or occasionally a between the two was that ACTV used ap- viding any support to a political action com- guest lecturer, taught twenty hours. Stu- proximately $260,000 in tax-deductible con- mittee. These prohibitions reflect congres- dents from each of the colleges as well as tributions to fund its operations. ACTV sional concerns that taxpayer funds not be people who were not students attended the broadcast three television programs in 1990 used to subsidize political activity. lectures. Mr. Gingrich’s 20-hour portion of and then ceased operations. The last pro- During the Preliminary Inquiry, the Sub- the course was taped and distributed to re- gram was funded by a 501(c)(4) organization committee consulted with an expert in the mote sites, referred to as ‘‘site hosts,’’ via because the show’s content was deemed to be law of tax-exempt organizations and read too political for a 501(c)(3) organization. satellite, videotape and cable television. As with AOW/ACTV, Renewing American Civili- materials on the subject. Mr. Gingrich’s ac- 2. RENEWING AMERICAN CIVILIZATION zation involved setting up workshops around tivities on behalf of AOW/ACTV and Renew- The second project utilizing 501(c)(3) orga- the country where people could gather to ing American Civilization, as well as the ac- nizations involved a college course taught by watch the course. While the course was edu- tivities of others on behalf of those projects Mr. Gingrich called Renewing American Civ- cational, Mr. Gingrich intended that the done with Mr. Gingrich’s knowledge and ap- ilization. Mr. Gingrich developed the course workshops would be, among other things, a proval, were reviewed by the expert. The ex- as a subset to and tool of a larger political recruiting tool for GOPAC and the Repub- pert concluded that those activities violated and cultural movement also called Renewing lican Party. the status of the organizations under section American Civilization. The goal of this The major costs for the Renewing Amer- 501(c)(3) in that, among other things, those movement, as stated by Mr. Gingrich, was ican Civilization course were for dissemina- activities were intended to confer more than the replacement of the ‘‘welfare state’’ with tion of the lectures. This expense was pri- insubstantial benefits on GOPAC, Mr. Ging- an ‘‘opportunity society.’’ A primary means marily paid for by tax-deductible contribu- rich, and Republican entities and candidates, of achieving this goal was the development tions made to the 501(c)(3) organizations that and provided support to GOPAC. of the movement’s message and the dissemi- sponsored the course. Over the three years At Mr. Gingrich’s request, the Subcommit- nation of that message as widely as possible. the course was broadcast, approximately $1.2 tee also heard from tax counsel retained by Mr. Gingrich intended that a ‘‘Republican million was spent on the project. The Ken- Mr. Gingrich for the purposes of the Prelimi- majority’’ would be the heart of the move- nesaw State College Foundation (‘‘KSCF’’) nary Inquiry. While that counsel is an expe- ment and that the movement would ‘‘profes- sponsored the course the first year. All funds rienced tax attorney with a sterling reputa- sionalize’’ House Republicans. A method for raised were turned over to KSCF and dedi- tion, he has less experience in dealing with achieving these goals was to use the move- cated exclusively for the use of the Renewing tax-exempt organizations law than does the ment’s message to ‘‘attract voters, re- American Civilization course. 1 KSCF did expert retained by the Subcommittee. Ac- sources, and candidates.’’ According to Mr. not, however, manage the course and its role cording to Mr. Gingrich’s tax counsel, the Gingrich, the course was, among other was limited to depositing donations into its type of activity involved in the AOW/ACTV things, a primary and essential means to de- bank account and paying bills from that ac- and Renewing American Civilization projects velop and disseminate the message of the count that were presented to it by the Dean would not violate the status of the relevant movement. of the KSC Business School. KSCF con- organizations under section 501(c)(3). He The core message of the movement and the tracted with the Washington Policy Group, opined that once it was determined that an course was that the welfare state had failed, Inc. (‘‘WPG’’) to manage and raise funds for activity was ‘‘educational,’’ as defined by the that it could not be repaired but had to be the course’s development, production and IRS, and did not have the effect of benefiting replaced, and that it had to be replaced with distribution. Jeffrey Eisenach, GOPAC’s Ex- a private interest, it did not violate the pri- an opportunity society based on what Mr. ecutive Director from June 1991 to June 1993 vate benefit prohibition. In the view of Mr. Gingrich called the ‘‘Five Pillars of Amer- was the president and sole owner of WPG. Gingrich’s tax counsel, motivation on the ican Civilization.’’ These were: (1) personal WPG and Mr. Eisenach played similar roles part of an organization’s principals and strength; (2) entrepreneurial free enterprise; with respect to AOW/ACTV. agents is irrelevant. Further, he opined that (3) the spirit of invention; (4) quality as de- When the contract between WPG and a 501(c)(3) organization does not violate the fined by Edwards Deming; and (5) the lessons KSCF ended in the fall of 1993, the Progress private benefit prohibition or political cam- of American history. The message also con- and Freedom Foundation (‘‘PFF’’) assumed paign prohibition through close association centrated on three substantive areas. These the role WPG had with the course at the with or support of a political action commit- were: (1) jobs and economic growth; (2) same rate of compensation. Mr. Eisenach tee unless it specifically calls for the elec- health; and (3) saving the inner city. was PFF’s founder and president. Shortly tion or defeat of an identifiable political can- This message was also Mr. Gingrich’s main after PFF took over the management of the didate. campaign theme in 1993 and 1994 and Mr. course, the Georgia Board of Regents passed Both the Subcommittee’s tax expert and Gingrich sought to have Republican can- a resolution prohibiting any elected official Mr. Gingrich’s tax counsel, however, agreed didates adopt the Renewing American Civili- from teaching at a Georgia state educational that had Mr. Gingrich sought their advice zation message in their campaigns. In the institution. This was the culmination of a before embarking on activities of the type context of political campaigns, Mr. Gingrich controversy that had arisen around the involved in AOW/ACTV and the Renewing used the term ‘‘welfare state’’ as a negative course at KSC. A group of KSC faculty had American Civilization course, each of them label for Democrats and the term ‘‘oppor- objected to the course being taught on the would have advised Mr. Gingrich not to use tunity society’’ as a positive label for Repub- campus because of a belief that it was an ef- a 501(c)(3) organization as he had in regard to licans. fort to use the college to disseminate a polit- those activities. The Subcommittee’s tax ex- As General Chairman of GOPAC, Mr. Ging- ical message. Because of the Board of Re- pert said that doing so would violate rich decided that GOPAC would use Renew- gent’s decision and the controversy, it was 501(c)(3). During his appearance before the ing American Civilization as its political decided that the course would be moved to a Subcommittee, Mr. Gingrich’s tax counsel message and theme during 1993–1994. GOPAC, private college. said that he would not have recommended however, was having financial difficulties The course was moved to Reinhardt for the the use of 501(c)(3) organizations to sponsor and could not afford to disseminate its polit- 1994 and 1995 sessions. While there, PFF as- the course because the combination of poli- ical messages as it had in past years. GOPAC sumed full responsibility for the course. PFF tics and 501(c)(3) organizations is an ‘‘explo- had a number of roles in regard to the no longer received payments to run the sive mix’’ almost certain to draw the atten- course. For example, GOPAC personnel course but, instead, took in all contributions tion of the IRS. helped develop, manage, promote, and raise to the course and paid all the bills, including Based on the evidence, it was clear that funds for the course. GOPAC Charter Mem- paying Reinhardt for the use of the college’s Mr. Gingrich intended that the AOW/ACTV bers helped develop the idea to teach the video production facilities. All funds for the and Renewing American Civilization projects course as a means for communicating course were raised by and expended by PFF have substantial partisan, political purposes. GOPAC’s message. GOPAC Charter Members under its tax-exempt status. In addition, he was aware that political ac- at Charter Meetings helped develop the con- tivities in the context of 501(c)(3) organiza- tent of the course. GOPAC was ‘‘better off’’ 1 As general management and support fees, KSCF tions were problematic. Prior to embarking as a result of the nationwide dissemination kept 2.5% of any money raised and KSC’s Business on these projects, Mr. Gingrich had been in- of the Renewing American Civilization mes- School kept 7.5% of any money raised. volved with another organization that had January 21, 1997 CONGRESSIONAL RECORD — HOUSE H199 direct experience with the private benefit cal, and that GOPAC had no involvement in As important as the creation of new doc- prohibition in a political context, the Amer- nor received any benefit from any aspect of trine is its dissemination. During the 1980s ican Campaign Academy. In a 1989 Tax Court the course. In his testimony before the Sub- GOPAC and Newt Gingrich have led the way opinion issued less than a year before Mr. committee Mr. Gingrich admitted that these in applying new technology, from C–SPAN to Gingrich set the AOW/ACTV project into mo- statements were not true. video tapes, to disseminate information to tion, the Academy was denied its exemption The goal of the letters was to have the Republican candidates and political activ- under 501(c)(3) because, although edu- complaints dismissed. Of the people involved ists. cational, it conferred an impermissible pri- in drafting or editing the letters, or review- * * * * * vate benefit on Republican candidates and ing them for accuracy, only Mr. Gingrich But the Mission Statement demands that entities. Close associates of Mr. Gingrich had personal knowledge of the facts con- we do much more. To create the level of were principals in the American Campaign tained in the letters regarding the course. change needed to become a majority, the Academy, Mr. Gingrich taught at the Acad- The facts in the letters that were inaccurate, new Republican doctrine must be commu- emy, and Mr. Gingrich had been briefed at incomplete, and unreliable were material to nicated to a broader audience, with greater the time on the tax controversy surrounding the Committee’s determination on how to frequency, in a more usable form. GOPAC the Academy. In addition, Mr. Gingrich stat- proceed with the tax questions contained in needs a bigger ‘‘microphone.’’ (emphasis in ed publicly that he was taking a very aggres- the complaints. the original). sive approach to the use of 501(c)(3) organiza- D. Statement of Alleged Violation tions in regard to, at least, the Renewing (Ex. 2, 283). GOPAC continued to support this On December 21, 1996, the Subcommittee American Civilization course. approach to achieving its goals in subse- Taking into account Mr. Gingrich’s back- issued a Statement of Alleged Violation stat- quent years. For example, as stated in its ground, experience, and sophistication with ing that Mr. Gingrich had engaged in con- Report to Shareholders dated April 26, 1993: respect to tax-exempt organizations, and his duct that did not reflect creditably on the While both ‘‘message’’ and ‘‘mechanism’’ status as a Member of Congress obligated to House of Representatives in that by failing are important, GOPAC’s comparative advan- maintain high ethical standards, the Sub- to seek and follow legal advice, Mr. Gingrich tage lies in developing new ideas—i.e. in the committee concluded that Mr. Gingrich failed to take appropriate steps to ensure ‘‘message’’ part of the equation. GOPAC will should have known to seek appropriate legal that activities with respect to the AOW/ thus continue to focus its efforts on develop- advice to ensure that his conduct in regard ACTV project and the Renewing American ing and communicating our values in a way to the AOW/ACTV and Renewing American Civilization project were in accordance with voters can understand and support. Civilization projects was in compliance with section 501(c)(3); and that on or about De- (Ex. 3, Eisenach 2539). 501(c)(3). Had he sought and followed such ad- cember 8, 1994, and on or about March 27, From approximately 1986 through 1995, Mr. vice—after having set out all the relevant 1995, information was transmitted to the Gingrich served as the General Chairman of facts, circumstances, plans, and goals de- Committee by and on behalf of Mr. Gingrich GOPAC. (7/17/96 Gingrich Tr. 15). In this role scribed above—501(c)(3) organizations would that was material to matters under consider- he came up with the ideas GOPAC used for not have been used to sponsor Mr. Gingrich’s ation by the Committee, which information, its political messages and themes, as well as ACTV and Renewing American Civilization as Mr. Gingrich should have known, was in- its vision, strategy, and direction. projects. accurate, incomplete, and unreliable. (7/17/96 Gingrich Tr. 20; 7/15/96 Gaylord Tr. 21– On December 21, 1996, Mr. Gingrich filed an 22; 6/26/96 Hanser Tr. 81; 7/12/96 Eisenach Tr. 4. MR. GINGRICH’S STATEMENTS TO THE answer with the Subcommittee admitting to COMMITTEE 22–23; 7/3/96 Rogers Tr. 54–56; this violation of House Rules. 6/27/96 Nelson Tr. 22–23; 12/7/96 Callaway Tr. 6, In responding to the complaints filed The following is a summary of the findings 9). against him concerning the Renewing Amer- of the Preliminary Inquiry relevant to the B. American Opportunities Workshop/American ican Civilization course, Mr. Gingrich sub- facts as set forth in the Statement of Alleged Citizens Television mitted several letters to the Committee. His Violation. first letter, dated October 4, 1994, did not ad- 1. BACKGROUND II. SUMMARY OF FACTS PERTAINING TO dress the tax issues raised in Mr. Jones’ com- AMERICAN CITIZENS TELEVISION In early 1990, GOPAC embarked on a plaint, but rather responded to the part of project to produce a television program A. GOPAC the complaint concerning unofficial use of called the American Opportunities Workshop official resources. In it Mr. Gingrich stated GOPAC was a political action committee (‘‘AOW’’). The idea for this project came that GOPAC, among other organizations, organized under Section 527 of the Internal from Mr. Gingrich and he was very involved paid people to work on the course. After this Revenue Code. As such, contributions to in developing the message it used. (12/7/96 response, the Committee wrote Mr. Gingrich GOPAC were not tax-deductible.2 GOPAC’s Callaway Tr. 11, 12, 14; 7/12/96 Eisenach Tr. 16; and asked him specifically to address issues goal was to attract people to the Republican 12/5/96 Eisenach Tr. 10; 12/9/96 Riddle Tr. 14; related to whether the course had a partisan, party, develop a ‘‘farm team’’ of Republican 12/9/96 Gingrich Tr. 12).4 AOW was broadcast political aspect to it and, if so, whether it state and local public officials who might on May 19, 1990, on the Family Channel and was appropriate for a 501(c)(3) organization one day run for Congress and, ultimately, was hosted by Mr. Gingrich. (Ex. 4, GOPAC3 to be used to sponsor the course. The Com- create a Republican majority in the United 181). mittee also specifically asked whether States House of Representatives. (12/7/96 One of the purposes of the program was to GOPAC had any relationship to the course. Callaway Tr. 9; 7/12/96 Eisenach Tr. 21; 7/17/96 build a citizens’ movement that would com- Mr. Gingrich’s letter in response, dated De- Gingrich Tr. 17–20).3 GOPAC did not under- municate the principles of Entrepreneurial cember 8, 1994, was prepared by his attorney, take any projects that were not directed to- Free Enterprise, Basic American Values, and but it was read, approved, and signed by Mr. ward achieving that goal. (7/18/96 Gingrich Technological Progress. (Ex. 5, FAM 0011; 12/ Gingrich. It stated that the course had no Tr. 362; 12/7/96 Callaway Tr. 33). 7/96 Callaway Tr. 14). These principles were partisan, political aspects to it, that his mo- GOPAC’s mission was defined as follows: called the ‘‘Triangle of American Success.’’ tivation for teaching the course was not po- GOPAC’s mission for the 1990’s is to create (Ex. 4, GOPAC3 181). AOW consisted of work- litical, and that GOPAC neither was involved and disseminate the doctrine which defines a shops set up throughout the country where in nor received any benefit from any aspect caring, humanitarian reform Republican activists could gather to watch the broad- of the course. In his testimony before the Party in such a way as to elect candidates, cast and, in the words of those responsible Subcommittee, Mr. Gingrich admitted that capture the United States House of Rep- for AOW, help build a citizens’ movement these statements were not true. resentatives and become a governing major- and increase citizen involvement. (12/7/96 When the amended complaint was filed ity at every level of Government. Callaway Tr. 14, 15; 12/9/96 Riddle Tr. 12, 13). with the Committee in January 1995, Mr. (Ex. 1, GOPAC3 137). This aspect of GOPAC’s Approximately 600 workshop cites were es- Gingrich’s attorney responded to the com- activities was further explained in a draft tablished where approximately 20,000 people plaint on behalf of Mr. Gingrich in a letter document from November 1989: watched the program. (Ex. 6, Eisenach 0359). dated March 27, 1995. His attorney addressed The target group for the program was non- all the issues in the amended complaint, in- voters. (Ex. 7, WGC2–01025). 2 cluding the issues related to the Renewing See September 6, 1996 letter from the tax counsel As stated by GOPAC’s then-Executive Di- American Civilization course. The letter was Mr. Gingrich hired during the Preliminary Inquiry, James Holden, at page 41: ‘‘Contributions made to rector, Kay Riddle, the purpose of creating signed by Mr. Gingrich’s attorney, but Mr. organizations described in section 501(c)(3) qualify the citizens’ movement and attempting to Gingrich reviewed and approved it prior to generally as charitable deductions under section increase citizen involvement was to get peo- its being delivered to the Committee. In an 170(c)(2). In contrast, contributions made to section ple to solve their own community problems interview with Mr. Cole, Mr. Gingrich stated 501(c)(4) and section 527 organizations do not qualify and not look to the federal government for that if he had seen anything inaccurate in as charitable deductions. For this reason, exempt help. (12/9/96 Riddle Tr. 13). Ms. Riddle went the letter he would have instructed his at- organizations that are described in section 501(c)(3) torney to correct it. Similar to the Decem- enjoy the substantial advantage of being able to attract donations that are deductible on the tax re- 4 The Committee’s Special Counsel, James Cole, ber 8, 1994 letter, the March 27, 1995 letter turns of contributors.’’ interviewed Mr. Gingrich on July 17, 1996; July 18, stated that the course had no partisan, polit- 3 Citations containing a ‘‘Tr.’’ indicate the page of 1996; and December 9, 1996. Mr. Gingrich appeared be- ical aspects to it, that Mr. Gingrich’s moti- the transcript from a witness’s interview. The date fore the Investigative Subcommittee to give testi- vation for teaching the course was not politi- of the interview is also provided in the citation. mony on November 13, 1996, and December 10, 1996. H200 CONGRESSIONAL RECORD — HOUSE January 21, 1997 on to say, ‘‘Another product of that would vided support through its staff. (Ex. 11, 4. It is more powerful and more effective to be, of course, if we got people interested Eisenach 4254; 12/5/96 Eisenach Tr. 5, 67). Each develop a reform movement parallel to the * * *, we hoped and believed that eventually program was broadcast on the Family Chan- official Republican Party because: they would vote Republican.’’ (12/9/96 Riddle nel. * * * * * Tr. 13). ‘‘[W]e [at GOPAC] truly believed that In setting up ACTV it was understood that b. the non-voters who are non-political or the more we could involve people and edu- Mr. Gingrich would maintain his involve- anti-political will accept a movement more cate people, the more likely we were to have ment and control over the programs. (Ex. 12, rapidly than they will accept an established people vote Republican.’’ (12/9/96 Riddle Tr. WGC2–01337). While some say that he was not party; 14–15). Similarly, Mr. Callaway characterized very involved when it became ACTV, (e.g., the message of AOW as follows: 12/7/96 Callaway Tr. 14), there is evidence * * * * * But I think, fundamentally * * * it was a that his involvement continued. Mr. Ging- 5. As much as possible, the House Repub- message that Republican principles are rich hosted the first ACTV program. Mr. lican Party, the Bush Administration, Sen- sound principles, that everything does not Gingrich also introduced and closed the sec- ate Republicans, incumbent Republicans need to be done by government, that you can ond program in September. The host was across the country, the NRCC, RNC, SRCC do better by trusting individuals to act for Pete DuPont, but Mr. Gingrich was featured and the conservative movement should be themselves than you can by having govern- for a significant portion of the program. briefed on movement developments; conflict ment tell individuals what they must do, While the last program in October was paid within this broad group should be minimized that a smaller government is frequently bet- for primarily by CCAGW, Mr. Gingrich ap- and coordination maximized. ter than a larger government, that it is bet- proved its use on ACTV. (Ex. 11, Eisenach 6. The objective measurable goal is the ter to reduce taxes than raise taxes. I think 4254). maximum growth of news coverage of our vi- it is Republican kinds of issues. Both AOW and ACTV were described to the sion and ideas, the maximum recruitment of (12/7/96 Callaway Tr. 12–13). public as non-partisan. (Ex. 6, Eisenach 0361). new candidates, voters and resources, and Producing AOW was very expensive. (12/7/96 Much of the documentation that was either the maximum electoral success in winning Callaway Tr. 16; 6/14/96 Callaway Tr. 21–22). It internal to GOPAC or sent to its supporters, seats from the most local office to the White cost over $500,000 and consumed approxi- however, indicates a partisan, political pur- House and then using those victories to im- mately 62% of GOPAC’s budget for the first pose. While GOPAC, as a political action plement the values of a governing conserv- half of 1990. (Ex. 8, 1273). It was envisioned committee, could freely engage in partisan, atism and to create the best America that that the project would continue beyond May political activity, ALOF, as a 501(c)(3) orga- can be. 19, 1990 (12/5/96 Eisenach Tr. 46; Ex. 4, nization could not. Because ACTV was de- (Ex. 13, Eisenach 4838–4839 (typed version) GOPAC3 181) and prior to its airing, Mr. scribed as a continuation of the activities of and Eisenach 4832–4834 (handwritten ver- Gingrich, Mr. Callaway and others decided to AOW (12/7/96 Callaway Tr. 13–15; 12/5/96 sion)). have the project’s follow-on activities trans- Eisenach Tr. 8; Ex. 5, FAM 0011), documents When asked about AOW and ACTV, Mr. ferred to a 501(c)(3) organization. (Ex. 9, were reviewed during the Preliminary In- Gingrich said he had very little recollection Eisenach 3909; 12/5/96 Eisenach Tr. 49; 12/7/96 quiry relating to both projects to determine of the projects. He said he was distracted by Callaway Tr. 80). The organization chosen what the goals were for the two projects. other events at the time such as his re-elec- was the Abraham Lincoln Opportunity Foun- GOPAC contracted with an organization tion efforts, legislative issues, and becoming dation (‘‘ALOF’’). The project was trans- Republican Whip. (12/9/96 Gingrich Tr. 19, 39, ferred to ALOF so that it could be funded called the Washington Policy Group (‘‘WPG’’) to manage AOW. (7/12/96 Eisenach 43). He said he had no recollection of the with tax-deductible money. (12/9/96 Riddle Tr. ‘‘Key Factors in a House GOP Majority’’ doc- 19). Tr. 298). Jeffrey Eisenach was president and sole owner of WPG and the project coordina- ument, did not know if it related to AOW or ALOF was established in 1984 in Colorado ACTV, and did not know the purpose for by Mr. Callaway to fund programs for inner tor for AOW. (7/12/96 Eisenach Tr. 298). Mr. Eisenach was also responsible for managing which it was written. (12/9/96 Gingrich Tr. 31). city youth. (6/14/96 Callaway Tr. 26). It had An analysis of other documents, however, been inactive for some time prior to 1990 and ALOF’s ACTV programs. (12/7/96 Callaway Tr. 16). WPG was essentially Mr. Eisenach’s shows its relationship to the AOW/ACTV was revived for the purpose of taking over projects. Mr. Callaway said in his interview the successor activities of AOW. (12/7/96 ‘‘personal consulting firm’’ and usually had two or three employees. (7/12/96 Eisenach Tr. that the goals set forth in the ‘‘Key Factors Callaway Tr. 84). Under ALOF the project be- in a House GOP Majority’’ document were came know as American Citizens’ Television 9). WPG used GOPAC office space and equipment as part of its compensation. (11/14/96 the same as those for AOW and ACTV. (12/7/ (‘‘ACTV’’). Mr. Callaway was the President 96 Callaway Tr. 37–38). of ALOF and Kay Riddle was the Secretary. Eisenach Tr. 60). In addition to its work on AOW and ACTV, WPG had a consulting con- As stated above, AOW was targeted to non- Mr. Callaway was also GOPAC’s Chairman voters. (Ex. 7, WGC2–01025). The ‘‘Key Fac- and Ms. Riddle was also GOPAC’s Executive tract with GOPAC from January 1989 through September 1993. (7/12/96 Eisenach Tr. tors in a House GOP Majority’’ document Director. ALOF hired some GOPAC employ- notes that non-voters are the ones to appeal ees on a full-time basis, used other GOPAC 9, 10, 298). Through WPG’s contract with GOPAC, Mr. Eisenach ‘‘provided research as- to in order to change the balance of power. employees and consultants on a part-time AOW/ACTV based the citizens’ movement on basis, and used GOPAC offices and facilities. sistance and advice to Mr. Gingrich, strate- gic advice to GOPAC and worked on some the ‘‘Triangle of American Success’’ which (12/7/96 Callaway Tr. 7, 11, 13, 14, 73–75). was made up of basic American values, en- ACTV was designed to continue AOW’s specific projects, focus groups and so forth, trepreneurial free enterprise, and techno- work of building a citizens’ movement based for GOPAC.’’ (7/12/96 Eisenach Tr. 9). Mr. logical progress. (Ex. 5, FAM 0011; 12/7/96 on the ‘‘Triangle of American Success’’ and Eisenach was also the Executive Director of Callaway Tr. 14). The ‘‘Key Factors in a had the same goals as AOW. (Ex. 5, FAM 0011; GOPAC from June 1991 to June 1993. (7/12/96 House GOP Majority’’ document indicates 12/7/96 Callaway Tr. 14; 12/9/96 Riddle Tr. 16; Eisenach Tr. 8). that it will use those same three principles 12/9/96 Gingrich Tr. 8). In order to ensure a 2. PLANNING AND PURPOSE FOR AOW/ACTV to appeal to non-voters. AOW/ACTV was fo- smooth transition, materials concerning cused on building a non-partisan citizens’ ACTV were given to all AOW participants on A document entitled ‘‘Key Factors in a movement. (Ex. 6, Eisenach 0358–0359; Ex. 5, May 19, 1990. (Ex. 6, Eisenach 0361). House GOP Majority’’ appears to be one of ACTV produced three television programs the earliest documents pertaining to the pur- FAM 0011). In the ‘‘Key Factors in a House in 1990—one on July 21 which discussed the pose of AOW and ACTV. A typed version and GOP Majority’’ document, Mr. Gingrich use of local access cable television for activ- a handwritten version of the document were states that ‘‘[i]t is more powerful and more ist movements; one on September 29 which produced during the Preliminary Inquiry. effective to develop a reform movement par- discussed educational choice;5 and one on Oc- The handwritten version is in Mr. Gingrich’s allel to the official Republican Party be- tober 27 which was about Taxpayers’ Action handwriting. In it he wrote: cause . . . the non-voters who are non-political or anti-political will accept a movement Day. The last program was primarily the re- 1. The fact that 50% of all potential voters more rapidly than they will accept an estab- sponsibility of the Council for Citizens are currently outside politics (non-voters) lished party.’’ (Ex. 13, Eisenach 4838 and Against Government Waste (‘‘CCAGW’’), a creates the possibility that a new appeal Eisenach 4832). 501(c)(4) organization. This was due to the might alter the current balance of political In a congressional briefing Mr. Gingrich fact that the content of the program was power by bringing in a vast number of new gave concerning AOW on March 30, 1990, he deemed to be inappropriate for ALOF to voters. sponsor as a 501(c)(3) organization. (Ex. 10, described AOW/ACTV as follows: FAM 0024). While CCAGW paid for all of the * * * * * It is our goal to define our position as a out-of-pocket expenses (e.g., production ex- 3. It is possible to articulate a vision of caring humanitarian reform party applying pense and broadcast time), ALOF still pro- ‘‘an America that can be’’ which is appealing the triangle of American success and apply- to most Americans, reflects the broad values ing common sense focused on success and op- of a governing conservatism (basic American portunities to explain in general terms for 5 A 1989 draft GOPAC document indicates that one of GOPAC’s projects designed to ‘‘create and dis- values, entrepreneurial Free Enterprise and the whole fall campaign, and again some seminate the new Republican doctrine for the 1990’s’’ Technological progress), and is very difficult Democrats will pick up the language and would be the Education Choice Coalition. (Ex. 2, for the Democrats to co-opt because of their this is open to everybody, this is a free coun- 284). ideology and their interest groups. try, we think on balance it is vastly more January 21, 1997 CONGRESSIONAL RECORD — HOUSE H201 advantageous to us than it is to the left Consequently, a major premise for the re- (Ex. 18, 2782–2783). Mr. Gingrich did not recall since they are the party of big city ma- search project is that younger citizens are this document. When asked whether AOW chines, they are the party of the unions, the right target group for a new majority was intended to be an election year boost, he they’re much more tied to the bureaucratic strategy and that a political theory and lan- said that it may have been, but he also welfare state. guage needs to be effective with them if it is thought it was idea oriented. (12/9/96 Ging- (Ex. 15, WGC2 06081, pp. 17–18). The ‘‘Key Fac- to be effective at all. Supporting this rich Tr. 39–40). tors in a House GOP Majority’’ document premise is an additional opportunity (to In an unsigned letter addressed to Mr. notes that the message of the citizens’ move- their not voting now) about younger voters— Thorton Stearns, apparently written for Mr. ment is designed not to be useful for Demo- they are already predisposed to vote Repub- Callaway’s signature,7 the AOW project and crats because it will be ‘‘very difficult for lican. its purpose were described as follows: [them] to co-opt [the ideas] because of their (Ex. 15, MSI 0031–0032). With more than 600 workshop sites across ideology and their interest groups.’’ (Ex. 13, 3. LETTERS DESCRIBING PARTISAN, POLITICAL the country, 30,000 participants, and exten- Eisenach 4838 and 4832–4833). NATURE OF AOW/ACTV sive media coverage, AOW was a significant At the congressional briefing, Mr. Gingrich success on its own terms. However, the real spoke of a focus group that was commis- A number of GOPAC letters also indicate reason GOPAC took on AOW was to explore sioned to assist in the AOW/ACTV effort. He the purpose behind AOW/ACTV. Some are described it as ‘‘the largest focus group signed, some are not, but the ones that are an innovative new mechanism for creating project ever undertaken by the Republican not signed were apparently in GOPAC’s files and motivating the new Republican majority Party.’’ (Ex. 14, WGC2 06081, p. 8). He said it for some years, indicating that they were of the 1990s. concentrated on non-voters under 40 years of probably sent out. For example, in a signed (Ex. 19, GOPAC3 467). In a letter over Mr. age (Ex. 14, WGC2 06081, p. 8) and tested nega- letter dated February 21, 1990, to members of Gingrich’s name dated June 21, 1990, AOW tive language like ‘‘the bureaucratic welfare GOPAC’s Executive Finance Committee, Mr. and ACTV are explicitly tied together in an state’’ and positive language like the ‘‘Tri- Callaway wrote that: effort to achieve the same goal of building angle of American Success,’’ ‘‘Entrepreneur- The next two years are absolutely critical the Republican Party and trying to have an ial Free Enterprise,’’ ‘‘Technological to all that we hope to accomplish. Our May impact on political campaigns. The letter Progress and Innovation,’’ and ‘‘Basic Amer- 19 project [AOW] will go a long way toward states: ican Values.’’ (Ex. 14, WGC2 06081, pp. 10–11). helping Republicans set an agenda and per- These are exciting times at GOPAC and we Near the end of the briefing Mr. Gingrich suading Americans to realign with us. have been quite busy lately. I am excited explained the reasons for having the program about [the] progress of the ‘‘American Citi- labeled as non-partisan: (Ex. 16, GOPAC3 484). A copy of this letter was sent to Mr. Gingrich. Written across the zens’ Television’’ project, which will carry Lastly I was going to make the point one top of his copy, in his handwriting, is ‘‘Newt the torch of citizen activism begun by our of the reasons we are reaching out and we 2/20/90.’’ (Ex. 16, WGC2–03992). According to American Opportunities Workshop on May really urge people to be nonpartisan and be Mr. Gingrich this probably meant he had 19th. We mobilized thousands of people wide open. But we have two reasons. First, seen the letter (12/9/96 Gingrich Tr. 36–37); across the nation at the grass roots level there are a lot of former Democrats. Andy however, he did not recall the content of this who as a result of AOW, are now dedicated Ireland, Ronald Reagan, Phil Gramm, Jean letter during an interview with Mr. Cole. (12/ GOPAC activists. We are making great Kirkpatrick, Connie Mack, you go down the 9/96 Gingrich Tr. 35). strides in continuing to recruit activists all list, a surprising list of people who looked at An unsigned letter, apparently prepared across America to become involved with the both sides and decided we were right. That for Mr. Callaway’s signature,6 dated March 7, Republican party. Our efforts are literally we were more open, we were moving in the 1990, states: snowballing into the activist movement we right direction. need to win in ’92. But second, most young people under 40 Our May 19th American Opportunities are not politicized. The minute you politi- Workshop is the single most exciting project (Ex. 20, GOPAC3 224). Mr. Gingrich said that cize this and you make it narrow and you I’ve ever undertaken. I consider this program the signature on the letter was not his. (12/ make it partisan—you lose them. critical to our efforts to become a Repub- 9/96 Gingrich Tr. 40). Mr. Gingrich said that (Ex. 14, WGC2 06081, pp. 23–24). lican majority. the above statement did not reflect the pur- The focus group Mr. Gingrich referred to pose of AOW or ACTV. (12/9/96 Gingrich Tr. was commissioned by GOPAC in early 1990. * * * * * 41). In order to encourage Americans to vote— It was performed by Market Strategies, Inc. Finally, an August 27, 1990 memorandum and vote Republican—so that we may enact The July 10, 1990 report on the results of the from Mr. Callaway to Mr. Gingrich and Jim our policies of opportunity, we must reach focus group described the project as follows: Tilton 8 gives insight to the goals of the them with our vision of hope. This research project is part of an overall It is time for our message and program, AOW/ACTV projects. (Ex. 21, Eisenach 3950– effort to build a new governing majority in now proven among those in the trenches, to 3959). The memorandum discusses a meeting the United States formed around conserv- be shared with the Americans who are not the three men had five days earlier. Based on ative principles. Historically, building a new motivated by our current government to go the memorandum, the main topic focused on majority has involved three essential tasks: to the polls or get involved. how GOPAC should proceed in the future. activating a group of non-participating citi- The problems addressed in the meeting con- zens to support an existing party (or form a * * * * * cerned the fact that AOW/ACTV had diverted new party), constructing a theory or expla- The American Opportunities Workshop is too much money and attention from tradi- nation of what is right and wrong in society GOPAC’s answer to teaching and empower- tional GOPAC efforts. This caused erosion in with which the non-participating citizens ing the American people. We hope that the support from GOPAC members. The three agree, and developing the right language (po- citizen movement launched by this project men decided to try one more ACTV program litical rhetoric) to communicate that theory will be the key to a future of Republican on September 29, 1990. If additional funding to the non-participating citizens. This governance. was not available beyond that point, the project is the first of several research (Ex. 17, 425–426). A March 16, 1990 GOPAC let- project would not be continued. They decided projects to be sponsored by GOPAC to help ter over Mr. Gingrich’s name discusses the that it needed to be ‘‘a very strong program achieve these three tasks in this decade. purpose behind AOW. that is controversial enough to stir up our (Ex. 15, MSI 0030). The report then describes Through the use of satellite hook-ups, not Charter members and other constituents.’’ the specific language it tested as follows: only can we reach new groups of voters not (Ex. 21, Eisenach 3951). The show that was chosen was on educational choice, which was The theory’s explanation of what is wrong traditionally associated with our Party, but a specific GOPAC project. in society was put in terms of ‘‘the bureau- we’ll be able to give them our message cratic welfare state’’ and the ‘‘values of the straight, without it being filtered and mis- The memorandum recounted that Mr. left.’’ The theory’s explanation of what is interpreted by liberal elements in the media. Gingrich had reviewed all the options set good in society was put in terms of ‘‘techno- * * * * * forth and concluded the following: logical progress,’’ ‘‘entrepreneurial free en- Because I believe it has such great poten- Newt then stated firmly that he feels we terprise,’’ and ‘‘basic American values’’ tial for helping President Bush, our can- need to go back to basics for now through which were summarized as ‘‘the Triangle of didates and our Party, I told Bo to move 1992. That the only special projects for 1992 American Success.’’ ahead with planning the workshop. should be 1992 election oriented projects. (Ex. 15, MSI 0030). Newt has now concluded that you can’t real- * * * * * ly affect 1992 elections indirectly—we must In describing the target group for building I truly believe that our Party and our do it directly through political programs. the new governing majority, the report President stand on the verge of a tremendous states: success this year, and that this workshop The potential for a new governing majority can be a great election year boost to us. 7 According to Mr. Callaway this letter may have exists because of the large and growing num- been sent out, but he again did not have a specific bers of non-participating citizens in our po- recollection of it. (12/7/96 Callaway Tr. 58). litical system. 6 According to Mr. Callaway this letter may have 8 Jim Tilton was an unpaid senior advisor to been sent out, but he did not have a specific recol- GOPAC. He was an attorney and a close friend of Mr. * * * * * lection of it. (12/7/96 Callaway Tr. 49). Gingrich. (12/10/96 Gingrich Tr. 10, 11, 56, 57). H202 CONGRESSIONAL RECORD — HOUSE January 21, 1997

(Ex. 21, Eisenach 3950).9 Mr. Callaway said discuss ACTV in terms which indicate that it On March 16, 1992, Mr. Eisenach wrote a that this paragraph could have been refer- continued to be treated as a GOPAC project. memorandum to June Weiss, GOPAC’s Fi- ring to ACTV, but he did not have a clear For example it states that ‘‘Our mission is to nance Director, concerning Mr. Callaway’s recollection. (12/5/96 Callaway Tr. 62). establish ACTV as a new, interactive infor- Charter Member dues. The memorandum 4. AOW/ACTV IN MR. GINGRICH’S CONGRESSIONAL mation network.’’ (Ex. 4, GOPAC3 181). The states: DISTRICT Charter Member Report is worded in a man- Bo has offered us a choice of (1) $10,000 While AOW/ACTV was supposed to be non- ner that indicates ACTV was considered a from him or (2) $20,000 from ALOF. I indi- partisan, two memoranda indicate that there GOPAC project. For example, it uses phrases cated to him on the phone today I would was some effort to ensure that workshops like ‘‘Our goal’’ with ACTV, ‘‘Our next ACTV tend to go for $20,000 over $10,000—in part, were set up in Mr. Gingrich’s congressional program,’’ and ‘‘Our program was hosted by frankly, because I think we ought to go district. In a memorandum to Mr. Callaway, ** *.’’ (Ex. 4, GOPAC3 181–182). At the end of ahead and get the ALOF loan repaid and be dated February 8, 1990, Mr. Eisenach wrote: the report under the heading ‘‘Getting Out done with it, as opposed to having it hanging the Message,’’ there is a chart showing the around for another year. An area for immediate attention is ‘‘tar- AOW and ACTV programs. It then lists how (Ex. 30, Eisenach 3725). On March 23, 1992, Mr. gets of opportunity’’—e.g. Georgia’s 6th Dis- many workshops were set up for each pro- Callaway’s foundation donated $20,000 to trict, Colorado, and the D.C. area. We need gram and what the estimated attendance ALOF. (Ex. 39, CNB 0443). On the same day, to identify resources to ensure that we maxi- was for these workshops. (Ex. 4, GOPAC3 ALOF wrote a check to GOPAC for $20,000. mize our returns in these three areas, and 183). other specific target areas we might add (Ex. 39, CNB 0447). A letter was sent to Mr. 6. GOPAC FUNDING OF ALOF AND ACTV 11 later. In particular, we need to put very high Callaway on ALOF stationery thanking him on our agenda the task of identifying a 6th When ALOF began to operate in June 1990 for the contribution. It was signed by numer- District Coordinator. it had less than $500 in its bank account. (Ex. ous members of GOPAC’s staff. (Ex. 31, 27, CNB 006). It obtained a loan for $25,000 (Ex. 22, Eisenach 3811). Similarly, in a March GOPAC2 0012). from the Central Bank of Denver in late Two other GOPAC Charter Members made 30, 1990 memorandum from Mr. Gingrich to June and received some direct contributions. contributions to ALOF which were imme- Joe Gaylord and Mary Brown, the following These came from a foundation associated diately turned over to GOPAC. (Ex. 40, CNB is written: with Mr. Callaway, the Family Channel, and 0217, CNB 0439, CNB 0441, CNB 0459). Hand- The GOPAC print-out shows only one very at least one other GOPAC supporter. (Ex. 28, written notes relating to one of them indi- tentative (Clay Davis) site in my district. ALOF 0050). In addition, GOPAC loaned cates that a tax-deductible option for his Time is getting short for finding sites and ALOF $45,000 in 1990, and $29,500 in early 1991 contribution to GOPAC was discussed before GOPAC needs to have the hosts identified as to pay for production expenses. The total of the contribution to ALOF was made. (Ex. 32, soon as possible to get materials to them to loans from GOPAC to ALOF was $74,500. (Ex. GOPAC2 2424–2426). make the workshops a success. 35, ALOF 0030). As of 1993 ALOF had relocated its offices to Please make this a high priority. ALOF’s last program was broadcast in Oc- Colorado. Its Colorado accountant was pre- (Ex. 23, GOPAC3 460). Mr. Gingrich did not tober 1990. In 1991 and 1992 it did not engage paring the tax return for 1992 and saw the recall this memorandum and said that there in any activities. In 1991, Citizens Against payments to GOPAC. In November she wrote was an effort to target the 6th District—his Government Waste contributed $37,000 to to Kay Riddle, ALOF’s Secretary, and asked congressional district—‘‘only in the sense ALOF and Mr. Callaway’s foundation con- for invoices from GOPAC to ALOF to sup- that we hosted [AOW] from there.’’ (12/9/96 tributed $10,000. (Ex. 28, ALOF 0090). The port these payments. (Ex. 33, Newbill 0119). Gingrich Tr. 19). total, $47,000, was given to GOPAC to be ap- In December, Ms. Riddle wrote to GOPAC’s 5. GOPAC’S CONNECTION TO ALOF AND ACTV plied to the debt. (Ex. 37, CNB 0426, CNB 0428, accountant asking for those invoices. (Ex. 34, As has been previously discussed, ACTV CNB 0430, CNB 0432). After the $47,000 pay- ALOF 0028). Several days later the account- was a continuation of AOW and ALOF used ment, ALOF owed GOPAC $27,500. (Ex. 28, ant provided Ms. Riddle with a summary GOPAC’s offices and facilities. In his inter- ALOF 0064).12 memorandum and a number of invoices. (Ex. view, Mr. Callaway stated a number of times In late 1991 and 1992, ALOF received con- 35, ALOF 0029–0030, ALOF 0027–0028, GOPAC3 that GOPAC was separate from ALOF. (12/7/ tributions from a number of GOPAC support- 0811). Some were undated. Some were dated 96 Callaway Tr. 64, 65–66, 68–69, 73). A number ers totalling $80,000. (Ex. 28, ALOF 0078). in 1991. All concerned activities which were of documents, however, from 1990 indicate $70,000 of that amount was given to GOPAC. stated to have taken place in 1990 and there that ALOF and ACTV had significant con- GOPAC’s then-Executive Director, Mr. is no evidence that the invoices were written nections to GOPAC. Eisenach, was involved in soliciting a num- contemporaneously with the events for In a June 26, 1990 memorandum to Mr. ber of these donations. which they billed.13 On February 27, 1992, Mr. Eisenach wrote Callaway, Mr. Eisenach recounts a discus- The invoices, along with the previously to R. Randolph Richardson to ask him to be- sion the two men had that morning with Mr. mentioned loans, totaled $160,537.70. This come a Charter Member of GOPAC. In order Gingrich. During that discussion, Mr. Ging- consisted of rent ($12,718.08), postage and of- to be a Charter Member, a person must con- rich gave them a handout that ‘‘identified fice supplies ($8,455.08), services of staff and tribute at least $10,000. In the letter Mr. three GOPAC/ALOF zones: 1. Local Elec- consultants ($64,864.54), and the loans Eisenach states: 14 tions, 2. Planning/R&D, 3. Movement.’’ (Ex. ($74,500). (Ex. 35, ALOF 0029, ALOF 0027, 24, Eisenach 4039). The memorandum goes on With respect to foundation funds, it is of ALOF 0026, GOPAC3 0811). The time for the to discuss how GOPAC and ALOF will relate course not appropriate for GOPAC to accept staff was apportioned to reflect the percent- to each other. 501(c)(3) money. However, Bo Callaway does age of their work spent on ALOF business. During the Preliminary Inquiry GOPAC have a foundation, the Abraham Lincoln Op- Some of the consultants listed, however, did produced copies of its ‘‘Confidential portunity Foundation (ALOF), which owes not keep any records reflecting the percent- Masterfile Reports’’ that were used to keep GOPAC a substantial sum of money. You age of time they spent on specific projects track of contributors. Under the section en- might consider a contribution to ALOF, and did not recall doing any work for ALOF. titled ‘‘Giving History’’ the 1990 reports list which would enable it to pay down its (12/2/96 Hanser Tr. 25; 12/5/96 Mahe Tr. 31). two entities: GOPAC and ALOF. (Ex. 25, GOPAC debt, and thus be of enormous help Records of one consultant did record the GOPAC3 0510). Attached to these reports are in our efforts to change the Congress in 1992. time he spent on ALOF business, but it was copies of correspondence from both GOPAC (Ex. 29, Eisenach 4652). Mr. Richardson’s substantially less than the time listed in the and ALOF to contributors. (Ex. 25, GOPAC3 foundation, the Grace Jones Richardson invoice. (Ex. 35, ALOF 0029; Ex. 36, WGC2– 0511–0515). Trust, wrote a $25,000 check to ALOF on An August 13, 1990 memorandum from Mr. April 14, 1992, and ALOF wrote a $25,000 13 Because of her assertion of a Constitutional Callaway to Mr. Gingrich lists the three check to GOPAC on April 23, 1992. (Ex. 38, privilege, the Subcommittee was unable to inter- broad things GOPAC does. The third one list- CNB 0449, CNB 0445). view the accountant for GOPAC and ALOF. ed is ‘‘Projects such as ACTV, AOW and 14 In the tax return for ALOF for 1990, Part VII asks, among other things, whether ALOF had any focus groups.’’ (Ex. 26, Eisenach 4251).10 11 There is no evidence that Mr. Gingrich had any transactions with a political action committee in- GOPAC’s Report to Charter Members dated significant involvement with this level of the finan- volving loans, shared facilities, equipment, or paid November 11, 1990, includes a section on cial aspects of the operations of ALOF. However, be- employees. Even though GOPAC was a political ac- Community Activism. (Ex. 4, GOPAC3 180– cause these facts form part of the basis for a rection committee the return answers ‘‘no’’ to all those 188). In that section it discusses AOW and ommendation by the Subcommittee that the rel- questions. (Ex. 28, ALOF 0056). The accountant for ACTV. While it states that ACTV is ‘‘legally evant materials gathered during the preliminary in- ALOF, who was also the accountant for GOPAC, said no longer a GOPAC project,’’ it goes on to quiry be made available to the Internal Revenue that she had answered those questions in the nega- Service, the matter is set forth in some detail. tive based on her belief that these questions specifi- 12 The original debt from GOPAC listed on ALOF’s cally excluded any transactions with political ac- 9 A GOPAC statement of ‘‘Revenue and Expenses’’ tax returns was for $45,247. This is not supported by tion committees. (10/31/96 Gilbert Tr. 18-20). She did attached to this memorandum shows a single line the checks from GOPAC to ALOF which only reflect not discuss this reading of the tax return with any- item for ‘‘AOW/ACTV.’’ (Ex. 21, Eisenach 3957). $45,000. This additional $247 continued to be listed one at ALOF, but she did fill the form out in this 10 According to Mr. Callaway, the listing of ACTV for the remaining years and was reflected in the ul- way and they signed it without any questions. (10/31/ was a ‘‘bad choice of words.’’ (12/7/96 Callaway Tr. timate forgiveness of a portion of this debt in 1993. 96 Gilbert Tr. 21). This same error occurred in the 70). It is not clear what the $247 represents. tax return for 1991. (Ex. 28, ALOF 0069). January 21, 1997 CONGRESSIONAL RECORD — HOUSE H203 01378–01379, Eisenach 4276–4277, Eisenach 4302– tant aspects of the movement was the cre- 44, PFF 14476). The notes end with the follow- 4303). According to Ms. Riddle, she did not ation of ‘‘disseminating groups and [a] sys- ing: attempt to apportion time based on the ac- tem of communication and education.’’ (Ex. We must renew American civilization by tual hours spent by these people on ALOF 42, HAN 02109). It also sought to ‘‘profes- studying these principles, networking suc- business. Instead, she said she determined sionalize’’ the House Republicans by using cess stories, applying these success stories to the percentages before any of the people had the ‘‘message to attract voters, resources develop programs that will lead to dramatic done any work based on her best guess of the and candidates’’ and develop a ‘‘mechanism progress, and then communicating these time they would spend. (12/9/96 Riddle Tr. 69– for winning seats.’’ (Ex. 42, HAN 02110). The principles and these opportunities so the 70). ultimate goal of the movement was to re- American people have a clear choice between Of the total amount listed on the invoices place the welfare state with an opportunity progress, renewal, prosperity, safety and of $160,537.70, ALOF paid GOPAC $117,000 be- society, and all efforts had to be exclusively freedom within America [sic] civilization tween 1991 and 1992. (Ex. 35, ALOF 0029). This directed to that goal. (Ex. 42, HAN 02119). Ul- versus decay, decline, economic weakness, left a balance of $43,537.70, which, according timately, it was envisioned that ‘‘a Repub- violent crime and bureaucratic dominance to ALOF’s 1993 tax return, was forgiven by lican majority [would be] the heart of the led by a multicultural elite. GOPAC. (Ex. 28, ALOF 0089).15 American Movement * * *’’. (Ex. 42, HAN Given that choice, our movement for re- According to Kathleen Taylor, a current 02117).17 Mr. Gingrich’s role in this move- newing American civilization will not just employee of the Speaker’s Office and the ment was to be the ‘‘advocate of civiliza- win the White House in 1996, we will elect former Political Services Director for tion,’’ the ‘‘definer of civilization,’’ the people at all levels dedicated to constructive GOPAC, the lessons learned from AOW and ‘‘teacher of the rules of civilization,’’ the proposals. ACTV were used for the Renewing American ‘‘arouser of those who form civilization,’’ the (Ex. 44, PFF 14477). (Emphasis in the origi- Civilization course discussed below. (6/28/96 ‘‘organizer of the pro-civilization activists,’’ nal).20 Taylor Tr. 45). Those lessons were ‘‘[h]ow to and the ‘‘leader (possibly) of the civilizing In a draft document entitled ‘‘Renewing get workshops sites, how to disseminate in- forces.’’ (Ex. 42, HAN 02104). In doing this, he American Civilization Vision Statement,’’ formation, [and] mass-marketing the ideas.’’ intended to ‘‘retain a primary focus on elect- written by Mr. Gingrich and dated March 19, (6/28/96 Taylor Tr. 45). In the same vein, a let- ed political power as the central arena and 1993, he again described the movement in ter from Mr. Eisenach to Mr. Mescon con- fulcrum by which a free people debate their partisan terms and emphasized that it need- taining the terms and conditions under future and govern themselves.’’ (Ex. 42, HAN ed to communicate the vision of renewing which WPG would manage the Renewing 02104). The support systems for this move- American civilization on very large scale. American Civilization course states: ment included GOPAC, some Republican (Ex. 46, WGC 00163–00171, WGC 00172–00191). international organizations, and possibly a Among our most significant project man- He wrote that renewing American civiliza- foundation. (Ex. 42, HAN 02121). There was agement undertakings was the 1990 ‘‘Amer- tion will require ‘‘a new party system so we substantial discussion of how to disseminate ican Opportunities Workshop’’ and its suc- can defeat the Democratic machine and the message of the movement. (Ex. 42, HAN cessor, American Citizens’ Television. Both transform American society into a more pro- 02109, 02110, 02111). Some of the methods dis- of these projects bear significant similarities ductive, responsible, safe country by replac- cussed for this dissemination included, ‘‘Pos- to the project you have asked us to get in- ing the welfare state with an opportunity so- sibly a series of courses with audio and vid- ciety.’’ (Ex. 46, WGC 00163). volved with, ‘‘Renewing American Civiliza- eotape followons’’/‘‘Possibly a text-book B. Role of the Course in the Movement tion.’’ Thus, we enter this undertaking with (plus audio, video, computer) series’’/‘‘Cam- both enthusiasm and a full understanding of Mr. Gingrich was asked about the role of pus (intellectual) appearances on ‘the his- the course in the movement. He said that the the enormity and complexity of the under- tories’ Gingrich the Historian applying the taking. course was ‘‘the only way actually to de- lessons of history to public life.’’ (Ex. 2, HAN velop and send * * * out’’ the message of the (Ex. 41, Mescon 0651). 02118). One of the tasks listed for 1993 is ‘‘De- III. SUMMARY OF FACTS PERTAINING TO movement. (7/17/96 Gingrich Tr. 42). In a later sign vision and its communication and com- interview, he modified this statement to say ‘‘RENEWING AMERICAN CIVILIZATION’’ municate it with modification after feed- that the course was ‘‘clearly the primary and A. Genesis of the Renewing American back.’’ (Ex. 2, HAN 02120). According to Mr. dominant method; it was not the only way Civilization Movement and Course Gingrich, the course was to be a subset of the one could have done it. But I think it was es- In his interview with the Special Counsel, movement and was to be a primary and essential to do it, to have the course.’’ (11/13/96 Mr. Gingrich said the idea for the course was sential means for developing and disseminat- Gingrich Tr. 126–127). first developed while he was meeting with ing the message of the movement. (7/17/96 The earliest known documentary reference Owen Roberts, a GOPAC Charter Member Gingrich Tr. 42, 58; 11/13/96 Gingrich Tr. 126– to the course in the context of the movement and advisor, for two days in December 1992. 127). is in an agenda for a meeting held on Feb- (7/17/96 Gingrich Tr. 11–12, 23–24; Another description of the Renewing ruary 15, 1993, at GOPAC’s offices. The meet- 7/15/96 Gaylord Tr. 23–24; Ex. 42, GOPAC2 American Civilization movement is found in ing had two agenda items: ‘‘I. General Plan- 2492). Mr. Gingrich wrote out notes at this notes of a speech Mr. Gingrich gave on Janu- ning/Renewing American Civilization’’ and meeting and they were distributed to some ary 23, 1993, to the National Review Insti- ‘‘II. Political/GOPAC Issues.’’ (Ex. 47, JR– of his advisors. (Ex. 42, HAN 02103–02125; 6/26/ tute. (Ex. 44, PFF 14473–14477, PFF 38279– 0000645–0000647). Under the first category, one 18 96 Hanser Tr. 28; 7/15/96 Gaylord Tr. 24–25; 7/ 38288). In those notes, Mr. Gingrich wrote topic listed is ‘‘American Civilization Class/ that ‘‘our generation’s rendezvous with his- 12/96 Eisenach Tr. 108–109).16 A review of Uplink.’’ (Ex. 47, JR–0000645). Under the sec- tory is to launch a movement to renew those notes indicates that the topic of dis- ond category two of the items listed are American civilization.’’ (Ex. 44, PFF 14474). cussion at this meeting centered mostly on a ‘‘GOPAC Political Plan & Schedule’’ and He noted that a majority of Americans favor political movement. The notes contain lim- ‘‘Charter Meeting Agenda.’’ (Ex. 47, JR– renewing American civilization and that 21 ited references to a course and those are in 0000645). Attached to the agenda for this ‘‘[w]e are ready to launch a 21st century con- the context of a means to communicate the meeting is a ‘‘Mission Statement’’ written servatism that will renew American civiliza- message of the movement. by Mr. Gingrich which applied to the overall tion, transform America from a welfare state The movement was to develop a message Renewing American Civilization movement, into an opportunity society and create a con- and then disseminate and teach that mes- including the course. (7/12/96 Eisenach Tr. servative governing majority.’’ (Ex. 44, PFF sage. (Ex. 42, HAN 02109). One of the impor- 248–249; 7/17/96 Gingrich Tr. 145–146). It states: 14475). Mr. Gingrich then goes on to describe We will develop a movement to renew the five pillars of American civilization and American civilization using the 5 pillars of 15 The amount listed on the Return was $43,785. As the three areas where the movement needs referred to earlier, it is unclear what the $247 dif- to offer solutions.19 He then wrote that if 20 ference represents. they develop solutions for those three areas Two days later Mr. Gingrich delivered a Special 16 Among the people who received copies of the Order on the House floor concerning Renewing notes were Mr. Hanser, Mr. Gaylord and Mr. they ‘‘will decisively trump the left. At that American Civilization. In this speech he described a Eisenach. In a subsequent memorandum to Gay point either Clinton will adopt our solutions movement to renew American civilization, but did Gaines and Lisa Nelson, as Ms. Gaines and Ms. Nel- or the country will fire the president who not mention the course. He did discuss the five pil- son were about to take over the management of subsidizes decay and blocks progress.’’ (Ex. lars of American civilization and the three areas GOPAC in October 1993, Mr. Gingrich described the where solutions needed to be developed. (Ex. 45, LIP roles each of the three men played in his life as fol- 00036–00045). 17 Mr. Gingrich said that he intended the move- lows: 21 It is not clear whether the meeting was exclu- 1. Joe Gaylord is empowered to supervise my ac- ment to be international in scope. Until some point sively a GOPAC meeting, but at least part of the tivities, set my schedule, advise me on all aspects of in 1995, however, its scope was only national. (7/17/96 agenda explicitly concerned GOPAC projects. As will my life and career. He is my chief counselor and one Gingrich Tr. 33). be discussed later, GOPAC’s political plan for 1993 of my closest friends. * * * 18 This appears to be the earliest example of Mr. centered on Renewing American Civilization. As 2. Steven Hanser is my chief ideas adviser, close Gingrich speaking about the Renewing American also discussed below, GOPAC’s April 1993 Charter personal friend of twenty years, and chief language Civilization movement. A draft of this document in Meeting was called ‘‘Renewing American Civiliza- thinker. * * * Mr. Gingrich’s handwriting is attached to the typed tion’’ and employed breakout sessions for Charter 3. Jeff Eisenach is our senior intellectual leader version of the notes. Members to critique and improve individual compo- and an entrepreneur with great talent and deter- 19 Although not mentioned in this speech, those nents of the course on Renewing American Civiliza- mination. * * * five pillars and three areas are each separate lection. (7/17/96 Gingrich Tr. 69–70; 7/12/96 Eisenach Tr. Ex. 43, GDC 11551, 11553). tures in what became the course. 144–146; 7/15/96 Gaylord Tr. 46). H204 CONGRESSIONAL RECORD — HOUSE January 21, 1997 21st Century Freedom so people understand gerates the role of GOPAC.’’ The letter was 7/3/96 Rogers Tr. 71–75; 7/15/96 Gaylord Tr. 66– freedom and progress is possible and their written to ‘‘flatter’’ the Charter Members. 67; 7/12/96 Eisenach Tr. 148–149, 272–275; practical, daily lives can be far better.* As (11/13/96 Gingrich Tr. 129–130). Lipsett Tr. 30–31). 26 In the first section, Mr. people become convinced American civiliza- In a March 29, 1993 memorandum, Mr. Gingrich wrote: tion must and can be renewed and the 5 pil- Gingrich specifically connects the course The challenge to us is to be positive, to be lars will improve their lives we will encour- with the political goals of the movement. specific, to be intellectually serious, and to The memorandum is entitled ‘‘Renewing age them and help them to network together be able to communicate in clear language a American Civilization as a defining concept’’ and independently, autonomously initiate clear vision of the American people and why improvements wherever they want. However, and is directed to ‘‘Various Gingrich it is possible to create that America in our we will focus on economic growth, health, Staffs.’’ 23 The original draft of the memoran- generation. and saving the inner city as the first three dum is in Mr. Gingrich’s handwriting. (Ex. Once the American people understand what key areas to improve. Our emphasis will be 51, GDC 08891–08892, GDC 10236–10238). In the they can have they will insist that their on reshaping law and government to facili- memorandum, Mr. Gingrich wrote: politicians abolish the welfare state which is tate improvement in all of [A]merican soci- I believe the vision of renewing American crippling them, their children, and their ety. We will emphasize elections, candidates civilization will allow us to orient and focus country and that they replace it with an op- and politics as vehicles for change and the our activities for a long time to come. portunity society based on historically prov- news media as a primary vehicle for commu- At every level from the national focus of en principles that we see working all around nications. To the degree Democrats agree the Whip office to the 6th district of Georgia us. with our goals we will work with them but focus of the Congressional office to the na- our emphasis is on the Republican Party as tional political education efforts of GOPAC (Ex. 52, GDC 10643). the primary vehicle for renewing American and the re-election efforts of FONG 24 we In the second portion of the document, Mr. civilization. should be able to use the ideas, language and Gingrich describes how the vision of renew- *Renewing American Civilization must be commu- concepts of renewing American civilization. ing America will be accomplished. He lists nicated as an intellectual-cultural message with (Ex. 51, GDC 08891). thirteen separate efforts that fall into cat- governmental-political consequences. (footnote in In the memorandum, he describes a process egories of communication of the ideas in original) for the dissemination of the message of Re- clear language, educating people in the prin- (Ex. 47, JR–0000646). newing American Civilization to virtually In February 1993, Mr. Gingrich first ap- ciples of replacing the welfare state with an every person he talks to. This dissemination proached Mr. Mescon about teaching the opportunity society, and recruiting public includes a copy of the Special Order speech course at KSC. (Ex. 48, Mescon 0278; 6/13/96 officials and activists to implement the doc- and a one-page outline of the course. He then Mescon Tr. 26–27). Mr. Gingrich had talked to trines of renewing American civilization. goes on to describe the role of the course in Dr. Mescon in October or November 1992 (Ex. 52, GDC 10644–10646). this process: about the general subject of teaching, but In the third section, Mr. Gingrich explic- there was no mention of the Renewing Amer- The course is only one in a series of strate- itly connects the course to the movement. ican Civilization course at that time. (6/13/96 gies designed to implement a strategy of re- First he starts out with three propositions Mescon Tr. 12–14). The early discussions with newing American civilization. that form the core of the course: (1) a refrain Mr. Mescon included the fact that Mr. Ging- (Ex. 51, GDC 08891). Another strategy involv- he refers to as the ‘‘four can’ts;’’ 27 (2) the rich intended to have the Renewing Amer- ing the course is: welfare state has failed; and (3) the welfare ican Civilization course disseminated Getting Republican activists committed to state must be replaced because it cannot be through a satellite uplink system. (Ex. 49, renewing American civilization, to setting repaired. (Ex. 52, GDC 10647; see also Ex. 54, Mescon 0664; 6/13/96 Mescon Tr. 29–30). up workshops built around the course, and to PFF 18361, 18365–18367). He then described the Shortly before this discussion with Mr. opening the party up to every citizen who goal of the movement: Mescon, in late January 1993, Mr. Gingrich wants to renew American civilization. met with a group of GOPAC Charter Mem- Our overall goal is to develop a blueprint 25 bers. In a letter written some months later (Ex. 51, GDC 08892). Jana Rogers, the Site for renewing America by replacing the wel- to GOPAC Charter Members, Mr. Gingrich Host Coordinator for the course in 1993, was fare state, recruit, discover, arouse and net- described the meeting as follows: shown a copy of this memorandum and said work together 200,000 activists including can- she had seen it in the course of her work at didates for elected office at all levels, and During our meeting in January, a number GOPAC. (7/3/96 Rogers Tr. 64). She said that arouse enough volunteers and contributors of Charter Members were kind enough to this represented what she was doing in her to win a sweeping victory in 1996 and then take part in a planning session on ‘‘Renew- job with the course. (7/3/96 Rogers Tr. 67–69). actually implement our victory in the first ing American Civilization.’’ That session not Steve Hanser, a paid GOPAC consultant and three months of 1997. only affected the substance of what the mes- someone who worked on the course, also said sage was to be, but also how best the new that the contents of the memorandum were Our specific goals are to: message of positive solutions could be dis- consistent with the strategy related to the 1. By April 1996 have a thorough, practical seminated to this nation’s decision makers— movement. (6/28/96 Hanser Tr. 42–45). blueprint for replacing the welfare state that elected officials, civic and business leaders, The most direct description of the role of can be understood and supported by voters the media and individual voters. In addition the course in relation to the movement to and activists. to my present avenues of communication I renew American civilization is set out in a We will teach a course on Renewing Amer- decided to add an avenue close to my heart, document which Mr. Gingrich indicates he ican civilization on ten Saturday mornings that being teaching. I have agreed with Ken- wrote. (7/17/96 Gingrich Tr. 162–163). The doc- this fall and make it available by satellite, nesaw State College, * * * to teach ‘‘Renew- ument has a fax stamp date of May 13, 1993 by audio and video tape and by computer to ing American Civilization’’ as a for-credit and indicates it is from the Republican interested activists across the country. A class four times during the next four years. Whip’s Office. (Ex. 52, GDC 10639–10649). The month will then be spent redesigning the Importantly, we made the decision to have document has three parts to it. The first is course based on feedback and better ideas. the class available as a ‘‘teleseminar’’ to stu- entitled ‘‘Renewing America Vision’’ (Ex. 52, Then the course will be retaught in Winter dents all across the country, reaching col- GDC 10639–10643); the second is entitled ‘‘Re- Quarter 1994. It will then be rethought and lege campuses, businesses, civic organiza- newing America Strategies’’ (Ex. 52, GDC redesigned for nine months of critical re- tions, and individuals through a live 10644–10646); and the third is entitled ‘‘Re- evaluation based on active working groups ‘‘uplink,’’ video tapes and audio tapes. Our newing American Civilization Our Goal.’’ actually applying ideas across the country hope is to have at least 50,000 individuals (Ex. 52, GDC 10647–10649). Mr. Gingrich said the course will be taught for one final time taking the class this fall and to have trained that the third part was actually a separate in Winter Quarter 1996. 200,000 knowledgeable citizen activists by document. (7/17/96 Gingrich Tr. 162–164). 2. Have created a movement and momen- 1996 who will support the principles and While all three parts are labeled ‘‘draft,’’ the tum which require the national press corps goals we have set. document was distributed to a number of Mr. (Ex. 50, Kohler 137–138). 22 During an inter- Gingrich’s staff members and associates, in- 26 Mr. Eisenach apparently sent a copy of this to a view with the Special Counsel, Mr. Gingrich cluding Mr. Hanser, Ms. Prochnow, Ms. Rog- GOPAC supporter in preparation for a meeting in said he doubted that he had written this let- ers, Mr. Gaylord, Mr. Eisenach, and Allan May of 1993. (7/12/96 Eisenach Tr. 146–149). In the ac- ter and said that the remark in the letter Lipsett (a press secretary). Each of the re- companying letter, Mr. Eisenach said: ‘‘The enclosed that the Charter Members’ comments played cipients of the document have described it as materials provide some background for our discus- a large role in developing the course ‘‘exag- an accurate description of the Renewing sions, which I expect will begin with a review of the American Civilization movement. (6/28/96 Vision, Strategies and Goals of our efforts to Renew Hanser Tr. 48, 53; 7/10/96 Prochnow Tr. 70–71; American Civilization. The class Newt is teaching at 22 The letter goes on to state that: [L]et me empha- Kennesaw State College this Fall is central to that size very strongly that the ‘‘Renewing American effort, and GOPAC and the newly created Progress & Civilization’’ project is not being carried out under 23 At the top of this memorandum is a handwritten Freedom Foundation both play important roles as the auspices of GOPAC, but rather by Kennesaw notation (not Mr. Gingrich’s) stating: ‘‘Tuesday 4 well. (Ex. 13, GOPAC2 2337).’’ State College and the Kennesaw State College Foun- p.m. GOPAC Mtg.’’ (Ex. 51, GDC 08891). 27 dation. We will not be relying on GOPAC staff to 24 ‘‘FONG’’ stands for Mr. Gingrich’s campaign or- This refrain goes as follows: ‘‘You cannot main- support the class, and I am not asking you for finan- ganization, ‘‘Friends of Newt Gingrich.’’ tain a civilization with twelve-year-olds having ba- cial support. 25 The ‘‘party’’ referred to in the quote is the Re- bies, fifteen-year-olds shooting each other, seven- (Ex. 50, Kohler 138) (emphasis in the original). publican Party. (11/13/96 Gingrich Tr. 80). teen-year-olds dying of AIDS, and eighteen-year- olds getting diplomas they can’t read.’’ January 21, 1997 CONGRESSIONAL RECORD — HOUSE H205 to actually study the material in order to re- United States House of Representatives. (11/ cussed below, that speech and training ses- port the phenomenon thus infecting them 13/96 Gingrich Tr. 169; 7/3/96 Rogers Tr. 38–40). sion centered on the Renewing American with new ideas, new language and new per- One of the methods it used was the creation Civilization message. Under ‘‘Ongoing Politi- spectives. of a political message and the dissemination cal Activities’’ the first aspect of the project 3. Have a cadre of at least 200,000 people of that message. (7/12/96 Eisenach Tr. 18–19; 6/ is described as sending tapes and establish- committed to the general ideas so they are 28/96 Hanser Tr. 13–14; 7/3/96 Rogers Tr. 36). ing a training module on Renewing Amer- The tool principally used by GOPAC to dis- creating an echo effect on talk radio and in ican Civilization and health care. (Ex. 61, seminate its message was audiotapes and letters to the editor and most of our can- PP001187; Ex. 62, Eisenach 2540). Under ‘‘Cur- didates and campaigns reflect the concepts videotapes. These were sent to Republican riculum Update and Expansion’’ the project of renewing America. activists, elected officials, potential can- is described as the production of new train- Replacing the welfare state will require didates, and the public. The ultimate pur- ing tapes based on Mr. Gingrich’s session at about 200,000 activists (willing to learn now pose of this effort was to help Republicans [sic] to replace the welfare state, to run for win elections. (6/27/96 Nelson Tr. 21–22; 7/15/96 the Virginia Republican Convention. (Ex. 61, office and to actually replace the welfare Gaylord Tr. 37, 39; 7/3/96 Rogers Tr. 35–36). PP01189; Ex. 62, Eisenach 2541). 30 1. GOPAC’S ADOPTION OF THE RENEWING state once in office) and about six million 2. GOPAC’S INABILITY TO FUND ITS POLITICAL AMERICAN CIVILIZATION THEME supporters (willing to write checks, put up PROJECTS IN 1992 AND 1993 yard signs, or do a half day’s volunteer At least as of late January 1993, Mr. Ging- work). rich and Mr. Eisenach had decided that At the end of 1992, GOPAC was at least (Ex. 52, GDC 10647–10649). The ‘‘sweeping vic- GOPAC’s political message for 1993 and 1994 $250,000 short of its target income (Ex. 65, tory’’ referred to above is by Republicans. would be ‘‘Renewing American Civiliza- PFF 38054) and financial problems lasted (11/13/96 Gingrich Tr. 86). The reference to tion.’’ 28 (Ex. 59, PFF 37584–37590; 11/13/96 throughout 1993. (7/15/96 Gaylord Tr. 71–72). ‘‘our candidates’’ above is to Republican can- Gingrich Tr. 157; 7/17/96 Gingrich Tr. 61–62, 74; Because of these financial shortfalls, GOPAC didates. (11/13/96 Gingrich Tr. 90). According 7/15/96 Gaylord Tr. 35–36, 42–43; 7/3/96 Rogers had to curtail its political projects, particu- Tr. 35, 54–56; 6/28/96 Taylor Tr. 26; 6/27/96 Nel- to Mr. Gingrich, Mr. Gaylord, and Mr. larly the tape program described above. (Ex. son Tr. 34, 46). As described in a February Eisenach, the three goals set forth above 65, PFF 38054–38060; Ex. 66, WGC 07428; 7/15/96 1993 memorandum over Mr. Gingrich’s name were to be accomplished by the course. (7/17/ Gaylord Tr. 71–72, 76). For example, accord- 96 Gingrich Tr. 174–179; 7/15/96 Gaylord Tr. 66– to GOPAC Charter Members: GOPAC’s core mission—to provide the ing to Mr. Gaylord, GOPAC usually sent out 67; 7/12/96 Eisenach Tr. 225; Ex. 55, GOPAC2 eight tapes a year; however, in 1993, it only 2419; Ex. 56, GOPAC2 2172–2173; Ex. 57, Mescon ideas and the message for Republicans to win sent out two. (7/15/96 Gaylord Tr. 76). One of 0626). at the grass roots—is now more important In various descriptions of the course, Mr. than ever, and we have important plans for these was the ‘‘Renewing American Civiliza- Gingrich stated that his intention was to 1993 and for the 1993–1994 cycle. The final en- tion’’ tape made from Mr. Gingrich’s June teach it over a four-year period. After each closure is a memorandum from Jeff Eisenach 1993 training session at the Virginia Repub- teaching of the course he intended to have it outlining our 1993 program which I encour- lican Convention (Ex. 63, JG 000001693). Ac- reviewed and improved. The ultimate goal age you to review carefully and, again, let companying the mailing of this tape was a was to have a final product developed by me know what you think. letter from Joe Gaylord in his role as Chair- April of 1996. (7/17/96 Gingrich Tr. 109; Ex. 56, (Ex. 60, PFF 37569). The attached memoran- man of GOPAC. That letter states: GOPAC2 2170). An explanation of this goal is dum, dated February 1, 1993, is from Mr. Ideas matter, and replacing the welfare found in a three-page document, in Mr. Ging- Eisenach to Mr. Gingrich and references state with an Opportunity society is so im- rich’s handwriting, entitled ‘‘End State April their recent discussions concerning GOPAC’s portant that Newt is developing a college political program for 1993. (Ex. 59, PFF 37584– 1996.’’ (Ex. 58, PFF 20107–20109). Mr. Gingrich course that he’ll be teaching this fall on this 37590). It then lists five different programs. said he wrote this document early in the subject, Renewing American Civilization. The fourth one states: process of developing the movement and de- I wanted you to hear his initial thoughts scribed it as a statement of where he hoped (4) Message Development/’’Renewing Amer- because it seems to me that we can’t answer to be by April 1996 in regard to the move- ican Civilization’’—focus group project designed the question ‘‘What does the Republican ment and the course. (7/17/96 Gingrich Tr. to test and improve the ‘‘Renewing American Party stand for?’’ without considering the is- 108–115). On the first page he wrote that the Civilization’’ message in preparation for its use sues Newt has raised in this speech. 200,000 plus activists will have a common in 1993 legislative campaigns and 1994 Congres- (Ex. 67, WGC 06215). In light of GOPAC’s poor language and general vision of renewing sional races. America, and a commitment to replacing the (Ex. 59, PFF 37584) (emphasis in original). Of financial condition, the dissemination of the welfare state. In addition, ‘‘[v]irtually all the other four programs listed, three relate Renewing American Civilization message Republican incumbents and candidates [will] directly to the use of the Renewing Amer- through the course was beneficial to its po- have the common language and goals.’’ (Ex. ican Civilization message. The fourth—the litical projects. In this regard, the following 58, PFF 20107). On the second page he wrote ‘‘ ‘Tory (Franchise) Model’ R & D’’—was not exchange occurred with Mr. Gingrich: that the ‘‘Republican platform will clearly done. (7/12/96 Eisenach Tr. 188). This same po- Mr. Cole: [I]s one of the things GOPAC be shaped by the vision, language, goals and litical program was also listed in two sepa- wanted to have done during 1993 and 1994 was analysis of renewing America.’’ (Ex. 58, PFF rate GOPAC documents dated April 26, 1993. the dissemination of its message; is that cor- 20108). In addition, virtually all Republican One is entitled ‘‘1993 GOPAC POLITICAL rect? Presidential candidates will broadly agree on PROGRAM’’ (Ex. 61, PP001187–00193) and the Mr. Gingrich: Yes. that vision, language, goals and analysis. other is the ‘‘GOPAC Report to Sharehold- Mr. Cole: GOPAC also did not have much (Ex. 58, PFF 20108). The Clinton administra- ers.’’ (Ex. 62, Eisenach 2536–2545). The first money in those years; is that correct? tion and the Democratic Party will be meas- page of the Report to Shareholders states: Mr. Gingrich: That is correct. Particu- ured by the vision, principles and goals of re- The challenge facing Republicans, how- larly—it gets better in ’94, but ’93 was very newing America and there will be virtual ever, is an awesome one: We must build a tight. agreement that the welfare state has failed. governing majority, founded on basic prin- Mr. Cole: That curtailed how much it could (Ex. 58, PFF 20108). On the last page Mr. ciples, that is prepared to do what we failed spend on disseminating its message? Gingrich wrote a timeline for the course run- to do during the last 12 years: Replace the Mr. Gingrich: Right. ning from September of 1993 through March Welfare State with an Opportunity Society Mr. Cole: The message that it was trying of 1996. At the point on the timeline where and demonstrate that our ideas are the key to disseminate was the Renewing American November 1994 appears, he wrote the word to progress, freedom and the Renewal of Civilization message; is that right? ‘‘Election.’’ (Ex. 58, PFF 20109). When Mr. American Civilization. Mr. Gingrich: Was the theme, yes. Hanser was asked about this document he (Ex. 62, Eisenach 2536). said that the vision, language, and concepts In describing the political programs, these documents provide status reports that indi- islature and did not need GOPAC’s help. (7/15/96 Gay- of the Renewing American Civilization lord Tr. 42). cate that the Renewing American Civiliza- movement discussed in the document were 30 GOPAC later produced two tapes from the ses- being developed in the course. (6/28/96 Hanser tion message is at the center of each project. sion. One was called ‘‘Renewing American Civiliza- Tr. 53). He went on to say that ‘‘End State’’ Under ‘‘Off-Year State Legislative Races tion’’ and was mailed to 8,742 people. (Ex. 63, JG was ‘‘an application of those ideas to a spe- (New Jersey, Virginia)’’ the project is de- 000001693). The other was called ‘‘Leading the Major- cific political end, which is one of the pur- scribed as ‘‘Newt speaking at and teaching ity’’ and became a major training tool for GOPAC, poses, remember, for the course.’’ (6/28/96 training seminar for candidates at [a June 5, used at least into 1996. (6/27/96 Nelson Tr. 18). Both Hanser Tr. 54). There was an appreciation 1993] Virginia Republican Convention.’’ (Ex. are based on the Renewing American Civilization 61, PP001187; Ex. 62, Eisenach 2540). 29 As dis- that this would be primarily a Republican message and contain the core elements of the endeavor. (6/28/96 Hanser Tr. 30). course. The ‘‘Renewing American Civilization’’ tape contains more of the RAC philosophy than the C. GOPAC and Renewing American Civilization 28 As mentioned above, the earliest mention of the Renewing American Civilization course was in Feb- ‘‘Leading the Majority’’ tape, however, both contain As discussed above, GOPAC was a political ruary 1993. (Ex. 47, JR–0000646). the basics of the course that Mr. Gingrich describes action committee dedicated to, among other 29 It is not clear whether any work was done in as the ‘‘central proposition’’ or ‘‘heart of the things, achieving Republican control of the New Jersey because that state had a Republican leg- course.’’ (Ex. 56, GOPAC2 2146–2209; Ex. 64, PP000330– 000337; Ex. 54, PFF 18361, 18365–18367). H206 CONGRESSIONAL RECORD — HOUSE January 21, 1997 (11/13/96 Gingrich Tr. 157–158). With respect to at GOPAC raising funds for the course. (7/10/ four of GOPAC’s five political projects as re- whether the dissemination of the course ben- 96 Prochnow Tr. 14–16; 6/13/96 Mescon Tr. 63– lating to Renewing American Civilization efited GOPAC, the following exchange oc- 67, 82; Ex. 74, Documents produced by (Ex. 60, PFF 37569–37576), and (2) GOPAC’s curred: Prochnow). 33 A number of the people and en- Charter Meeting agenda entitled ‘‘Renewing Mr. Cole: Was GOPAC better off in a situa- tities she contacted were GOPAC supporters. American Civilization.’’ As discussed below, tion where the message that it had chosen as In fact, according to Mr. Eisenach, approxi- this Charter Meeting included breakout ses- its political message for those years was mately half of the first year’s funding for the sions to help develop a number of the lec- being disseminated by the course? Was it course came from GOPAC supporters. (Ex. 69, tures for the course, as well as GOPAC’s better off? PFF 1168–1169). Some of those people also message for the 1993–1994 election cycle. (Ex. Mr. Gingrich: The answer is yes. helped fund the course in 1994. (See attach- 78, PP00448–PP000452). As Mr. Gingrich stated ments to Ex. 69, PFF 1252–1277) (the docu- (11/13/96 Gingrich Tr. 167). in his interview, his intention was to have ments contain Mr. Eisenach’s marks of ‘‘G’’ GOPAC use Renewing American Civilization 3. GOPAC’S INVOLVEMENT IN THE DEVELOPMENT, next to the people, companies, and founda- as its message during this time frame. (7/17/ FUNDING, AND MANAGEMENT OF THE RENEW- tions that were donors or related to donors 96 Gingrich Tr. 74; 7/3/96 Rogers Tr. 54–56). ING AMERICAN CIVILIZATION COURSE to GOPAC.)) In 1993 Mr. Eisenach periodically produced a. GOPAC personnel When Mr. Eisenach resigned from GOPAC a list of GOPAC projects. The list is entitled Starting at least as early as February 1993, and assumed the title of the course’s project ‘‘Major Projects Underway’’ and was used for Mr. Eisenach, then GOPAC’s Executive Di- director, two GOPAC employees joined him staff meetings. (7/12/96 Eisenach Tr. 213; 7/15/ rector, was involved in developing the Re- in his efforts. Kelly Goodsell had been Mr. 96 Gaylord Tr. 79–80; 6/28/96 Taylor Tr. 43–44). newing American Civilization course. Al- Eisenach’s Administrative Assistant at Items related to the Renewing American Civ- though Mr. Eisenach has stated that Mr. GOPAC since March of 1993 (7/9/96 Goodsell ilization course were listed in several places Gaylord was responsible for the development Tr. 8, 11), and Michael DuGally had been an on GOPAC’s project sheets. For example, of the course until mid-May 1993 (7/12/96 employee at GOPAC since January 1992. (7/19/ from April 1993 through at least June 1993, Eisenach Tr. 71–75; Ex. 68, Eisenach Testi- 96 DuGally Tr. 9–10). Both went to work on ‘‘Renewing American Civilization Support’’ mony Before House Ethics Committee at Tr. the course as employees of Mr. Eisenach’s is listed under the ‘‘Planning/Other’’ section 142; Ex. 69, PFF 1167), Mr. Gaylord stated Washington Policy Group (‘‘WPG’’).34 In the of GOPAC’s projects sheets. (Ex. 79, JG that he never had such a responsibility. (7/15/ contract between WPG and KSCF, it was un- 000001139, JG 000001152, JG 000001173, JG 96 Gaylord Tr. 15–18). Additionally, Mr. Ging- derstood that WPG would devote one-half of 000001270). Another entry which appears a rich and others involved in the development the time of its employees to working on the number of times under ‘‘Planning/Other’’ is of the course identified Mr. Eisenach as the course. WPG had only one other client at ‘‘RAC Pert Chart, etc.’’ (Ex. 79, JG 000001152, person primarily responsible for the develop- this time—GOPAC. In its contract with JG 000001173, JG 000001270). It refers to a ment of the course from early on. (7/17/96 GOPAC, WPG was to receive the same time-line Mr. Eisenach wrote while he was Gingrich Tr. 117, 121; 6/13/96 Mescon Tr. 30–31; monthly fee as was being paid by KSCF in the Executive Director of GOPAC relating to 6/28/96 Hanser Tr. 74–75; 7/3/96 Rogers Tr. 17– return for one-half of the time of WPG’s em- the development of the various components 18, 22). 31 Several documents also establish ployees. (Ex. 76, PFF 37450–37451). The con- of the course, including marketing and site Mr. Eisenach’s role in the development of tract also stated that to the extent that coordination, funding, readings, and the the course starting at an early stage. One WPG did not devote full time to KSCF and course textbook. (Ex. 80, PFF 7529–7533; 7/12/ document written by Mr. Eisenach is dated GOPAC projects, an adjustment in the fee 96 Eisenach Tr. 212–213). Finally, under the February 25, 1993, and shows him, as well as paid to WPG would be made. (Ex. 76, PFF heading ‘‘Political’’ on the May 7, 1993, others, tasked with course development and 37450). Neither Ms. Goodsell nor Mr. DuGally project sheet, is listed the phrase ‘‘CR/RAC marketing. (Ex. 70, PFF 16628). A memoran- worked on any GOPAC project after they Letter.’’ (Ex. 79, JG 000001152). This refers to dum from Mr. Gingrich to Mr. Mescon, dated started working on the course in June of a mailing about the course sent over Mr. March 1, 1993, describes how Mr. Eisenach is 1993. (7/9/96 Goodsell Tr. 8, 10–11; 7/19/96 Gingrich’s name by GOPAC to approxi- involved in contacting a number of institu- DuGally Tr. 14). Mr. Eisenach said that he mately 1,000 College Republicans. (Ex. 81, tions in regard to funding for the course. spent at the most one-third of his time dur- Mescon 0918, 0915, 0914 and Meeks 0038–0040; 7/ (Ex. 71, KSC 3491). ing this period on GOPAC projects. (7/12/96 15/96 Gaylord Tr. 81–82). Aside from Mr. Eisenach, other people af- Eisenach Tr. 36–37). No adjustment to WPG’s filiated with GOPAC were involved in the de- fee was made by GOPAC. (7/12/96 Eisenach Tr. b. Involvement of GOPAC charter members in velopment of the course. Mr. Gingrich was 44).35 course design General Chairman of GOPAC and had a sub- The February 15, 1993, agenda discussed stantial role in the course. Jana Rogers above also gives some indication of GOPAC’s As discussed earlier, Mr. Gingrich had a served as Mr. Eisenach’s executive assistant role in the development of the Renewing meeting with GOPAC Charter Members in at GOPAC during the early part of 1993 and American Civilization course. (Ex. 47, JR– January 1993 to discuss the ideas of Renew- in that role worked on the development of 0000645–0000647). Of the eight attendees at ing American Civilization. (11/13/96 Gingrich the course. (7/3/96 Rogers Tr. 16–17). In June that meeting, five worked for or were closely Tr. 132). According to a letter written about 1993, she temporarily left GOPAC at Mr. associated with GOPAC (Mr. DuGally, Mr. that meeting, the idea to teach arose from Eisenach’s request to become the course’s Eisenach and Ms. Rogers were employees, that meeting. In April 1993, GOPAC held its Site Host Coordinator. As a condition of her Mr. Hanser was a member of the Board and semi-annual Charter Meeting. Its theme was becoming the site host coordinator, she re- a paid GOPAC consultant, and Mr. Gingrich ‘‘Renewing American Civilization.’’ (Ex. 78, ceived assurances from both Mr. Eisenach was the General Chairman). Furthermore, PP000448–PP000452). Mr. Gingrich gave the and Mr. Gaylord that she could return to the agenda for that meeting indicates that keynote address, entitled ‘‘Renewing Amer- GOPAC when she had finished her assign- GOPAC political issues were to be discussed ican Civilization,’’ and there were five break- ment with the course. (7/3/96 Rogers Tr. 12– as well as course planning issues. Two of the out sessions entitled ‘‘Advancing the Five 16). After approximately five months as the GOPAC political issues apparently related Pillars of Twenty-first Century Democracy.’’ course’s Site Host Coordinator, she returned to: (1) the political program described in the (Ex. 78, PP000449). Each of the breakout ses- to GOPAC for a brief time. (7/3/96 Rogers 24– February 1, 1993, memorandum which lists sions was named for a lecture in the course, 25). Steve Hanser, a member of the GOPAC and these sessions were used to help develop Board and a paid GOPAC consultant, helped the content of the course (11/13/96 Gingrich 33 Mr. Eisenach has stated that he did not ask Ms. develop the course. (6/28/96 Hanser Tr. 10, 19– Tr. 164–165; 7/17/96 Gingrich Tr. 69–70; 7/12/96 Prochnow to do this fundraising work, but rather Eisenach Tr. 144–146; 7/15/96 Gaylord Tr. 46) as 21). Mr. Gaylord was a paid consultant for Mr. Gaylord did. (7/12/96 Eisenach Tr. 71, 75; Ex. 65, GOPAC and had a role in developing the PFF 1168). However, both Mr. Gaylord and Ms. well as GOPAC’s political message for the course. (7/15/96 Gaylord Tr. 15). Prochnow clearly state that it was Mr. Eisenach, 1993 legislative campaigns and the 1994 con- Pamla Prochnow was hired as the Finance not Mr. Gaylord, who directed Ms. Prochnow to per- gressional races. (11/13/96 Gingrich Tr. 164– Director for GOPAC in April 1993. 32 Ms. form the fundraising work. (7/15/96 Gaylord Tr. 16, 17; 165; Ex. 62, Eisenach 2540). As stated in a Prochnow spent a portion of her early time 7/10/96 Prochnow Tr. 14, 73–74; Ex. 71, Letter dated memorandum from Mr. Eisenach to GOPAC July 25, 1996, from Prochnow’s attorney). Charter Members, these breakout sessions 34 As discussed earlier, WPG was a corporation were intended to ‘‘dramatically improve 31 The February 15, 1993, agenda for the meeting formed by Mr. Eisenach which had a contract with where the RAC course and other GOPAC issues were KSCF to run all aspects of the course. both our understanding of the subject and discussed, lists Mr. Eisenach as an attendee, but 35 The only other person who was involved in the our ability to communicate it.’’ (Ex. 82, Rob- does not list Mr. Gaylord as being present. (Ex. 47, early development of the course was Nancy erts 0045–0048). JR–0000645). Desmond. She did not work for GOPAC, but had c. Letters sent by GOPAC 32 During her interviewing process, Ms. Prochnow been a volunteer at Mr. Gingrich’s campaign office was provided with materials to help her understand for approximately a year before starting to work on In June of 1993, GOPAC sent a letter over the goals of GOPAC. (Ex. 72, GOPAC2 0529). Al- the course. (6/13/96 Desmond Tr. 15–16). She contin- Mr. Gingrich’s signature stating that ‘‘it is though she has no specific recollection as to what ued to work as a volunteer for Mr. Gingrich’s cam- these materials were, she believes they were mate- paign until July of 1993, when she was told to resign vital for Republicans to now DEVELOP and rials related to the Renewing American Civilization from the campaign because of the perceived negative put forward OUR agenda for America.’’ (Ex. movement. (7/10/96 Prochnow Tr. 18–19; Ex. 73, image her two roles would project. (6/13/96 Desmond 83, PP000534) (emphasis in original). In dis- PP000459–000463; PP00778). Tr. 37–38; Ex. 77, PFF 38289). cussing an enclosed survey the letter states: January 21, 1997 CONGRESSIONAL RECORD — HOUSE H207 It is the opening step in what I want to be As the new finance director, I want to in- meant that Mr. Gingrich had seen the letter. an unprecedented mobilization effort for Re- troduce myself and to assure you of my com- (9/6/96 Robinson Tr. 4). The letter sent to Mr. publicans to begin the process of replacing mitment and enthusiasm to the recruitment Bergschneider on May 12, 1994, was produced America’s failed welfare state. and training of grassroots Republican can- from the files of Mr. Gingrich’s Washington, And the key political component of that didates. In addition, with the course Newt D.C. office and has Ms. Robinson’s initials on effort will be an all-out drive to end the will be teaching in the fall—Renewing Amer- it. (9/6/96 Robinson Tr. 4). Democrat’s 40 year control of the U.S. House ican Civilization—I see a very real oppor- The letters sent out over Mr. Gingrich’s or Representatives in 1994! tunity to educate the American voting popu- signature were shown to Mr. Gingrich during an interview. He said that none of them con- (Ex. 83, PP000535).36 The letter then states lation to Republican ideals, increasing our tained his signature, he did not recall seeing that it is important to develop the themes opportunity to win local, state and Congres- them prior to the interview, and said he and ideas that will be needed to accomplish sional seats.38 would not have written them in the language the victory in 1994. (Ex. 83, PP000536). In lan- (Ex. 85, PP000194). On January 3, 1994, Ms. used. (7/17/96 Gingrich Tr. 77–78, 140–141). Mr. guage that is very similar to the core of the Prochnow sent another letter to the Charter Gaylord said that ‘‘it seemed to [him] there course, but with an overtly partisan aspect Members. It states: was a whole series of kind of usual cor- added to it, the letter states: As we begin the new year, we know our respondence that was done by the staff’’ that Personally, I believe we can and should goals and have in place the winning strate- Mr. Gingrich would not see. (7/15/96 Gaylord turn the 1994 midterm elections into not just gies. The primary mission is to elect Repub- Tr. 77). The content of the letters listed a referendum on President Clinton, but on licans at the local, state and congressional above, however, are quite similar to state- whether we maintain or replace the welfare level. There, also, is the strong emphasis on ments made directly by Mr. Gingrich about state and the Democratic Party which sup- broadcasting the message of renewing Amer- the movement and the role of the course in ports it. ican civilization to achieve peace and pros- the movement. (See, e.g., Ex. 47, JR–0000646 I believe the welfare state which the Demo- perity in this country. (‘‘emphasis is on the Republican Party as the crats have created has failed. (Ex. 86, PP000866). In another letter sent over primary vehicle for renewing American civ- In fact, I challenge anyone to say that it Mr. Gingrich’s name, the course is again dis- ilization’’); Ex. 52 GDC 10639–10649 (‘‘sweeping has succeeded, when today in America cussed. The letter, dated May 12, 1994, is ad- victory’’ will be accomplished through the twelve year olds are having children, fifteen dressed to Marc Bergschneider and states: course); Ex. 88, GDC 10729–10733 (‘‘Democrats year olds are killing each other, seventeen are the party of the welfare state.’’ ‘‘Only by year olds are dying of AIDS and eighteen I am encouraged by your understanding voting Republican can the welfare state be year olds are being given high school diplo- that the welfare state cannot merely be re- replaced and an opportunity society be cre- mas they cannot even read. paired, but must be replaced and have made ated.’’)) a goal of activating at least 200,000 citizen * * * * * D. ‘‘Replacing the Welfare State With an activists nationwide through my course, Re- Opportunity Society’’ as a Political Tool And what I want to see our Party work to newing American Civilization. We hope to replace it with is a plan to renew America educate people with the fact that we are en- According to Mr. Gingrich, the main theme of both the Renewing American Civilization based on what I call ‘‘pillars’’ of freedom and tering the information society. In order to movement and the course was the replace- progress: make sense of this society, we must rebuild ment of the welfare state with an oppor- (1) Personal strength; an opportunistic country. In essence, if we tunity society. (7/17/96 Gingrich Tr. 52, 61, (2) A commitment to quality in the work- can reach Americans through my course, place; 170; 11/13/96 Gingrich Tr. 85). Mr. Gingrich independent expenditures, GOPAC and other also said, ‘‘I believe that to replace the wel- (3) Spirit of American Inventiveness; strategies, we just might unseat the Demo- (4) Entrepreneurial free enterprise applied fare state you almost certainly had to have cratic majority in the House in 1994 and a [R]epublican majority.’’ (7/17/96 Gingrich to both the private and public sectors; make government accountable again. (5) Applying the lessons of American his- Tr. 51). ‘‘I think it’s hard to replace the wel- tory as to what works for Americans to pro- (Ex. 87, GDC 01137). Current and former fare state with the [D]emocrats in charge.’’ posed government solutions to our problems. GOPAC employees said that before a letter (7/17/96 Gingrich Tr. 62). The course was de- After being active in politics for thirty would go out over Mr. Gingrich’s signature, signed to communicate the vision and lan- years, and being in Congress for fourteen of it would be approved by him. (7/3/96 Rogers guage of the Renewing American Civilization them, I firmly believe these five principles Tr. 88; 6/27/96 Nelson Tr. 56–60). According to movement and ‘‘was seen as a tool that could can develop a revolutionary change in gov- Mr. Eisenach, Mr. Gingrich ‘‘typically’’ re- be used to replace the welfare state.’’ (7/17/96 ernment. Properly applied, they can dra- viewed letters that went out over his signa- Gingrich Tr. 159–160; see also 11/13/96 Gingrich Tr. 47, 76).39 matically improve safety, health, education, ture, but did not sign all letters that were part of a mass mailing. (7/12/96 Eisenach Tr. In addition to being the title of a move- job creation, the environment, the family ment, the course, and GOPAC’s political and our national defense. 35). With respect to letters sent to individuals over Mr. Gingrich’s name, Mr. Eisenach message for 1993 and 1994, ‘‘Renewing Amer- (Ex. 83, PP000536). In other letters sent out said the following: ican Civilization’’ was also the main message by GOPAC, the role of the Renewing Amer- of virtually every political and campaign Mr. Eisenach: [Mr. Gingrich] would either ican Civilization course in relation to the speech made by Mr. Gingrich in 1993 and 1994. review those personally or be generally Republican political goals of GOPAC were (7/17/96 Gingrich Tr. 69).40 According to Mr. described in explicit terms. A letter to Neil aware of the content. In other words, on Gingrich, there was an effort in 1994 to use Gagnon, dated May 5, 1993, over Mr. Ging- rare, if any, occasions, did I or anybody else the ‘‘welfare state’’ label as a campaign tool rich’s name, states: invent the idea of sending a letter to some- against the Democrats and to use the ‘‘op- body, write the letter, send it under Newt’s portunity society’’ label as an identification As we discussed, it is time to lay down a signature and never check with him to see blue print—which is why in part I am teach- for the Republicans. (7/17/96 Gingrich Tr. 113). whether he wanted the letter to go. Mr. Gingrich made similar comments in a ing the course on Renewing American Civili- There were occasions—now, sometimes zation. Hopefully, it will provide the struc- subsequent interview: that would be—Newt and I would discuss the Mr. Cole: During [1993–1994] was there an ture to build an offense so that Republicans generic need for a letter. I would write the can break through dramatically in 1996. We effort to connect the Democrats with the letter and send it and fax a copy to him and welfare state? have a good chance to make significant gains make sure he knew that it had been sent. in 1994, but only if we can reach the point Mr. Cole: Would you generally review the where we are united behind a positive mes- 39 During his interview, the following exchange oc- contents of the letter with him prior to it curred regarding the movement: sage, as well as a critique of the Clinton pro- going out? gram.37 Mr. Cole: Yet there was an emphasis in the move- Mr. Eisenach: Not necessarily word for ment on the Republican Party? (Ex. 84, GOPAC2 0003). In a letter dated June word. It would depend. But as a general mat- Mr. Gingrich: There certainly was on my part, yes. 21, 1993, that Pamla Prochnow, GOPAC’s new ter, yes. Mr. Cole: You were at the head of the movement, finance director, sent to Charter Members as were you not? (7/12/96 Eisenach Tr. 36). Mr. Gingrich’s Ad- Mr. Gingrich: Well, I was the guy trying to create a follow-up to an earlier letter from Mr. ministrative Assistant, Rachel Robinson, Gingrich, she states: it. stated that in 1993 and 1994 whenever she re- Mr. Cole: The course was used as the tool to com- ceived a letter or other document for Mr. municate the message of the movement, was it not? 36 The copy of the letter produced is a draft. While Gingrich that was to be filed, she would sign Mr. Gingrich: Yes, it was a tool, yes. Mr. Gingrich was not able to specifically identify Mr. Gingrich’s name on the document and (11/13/96 Gingrich Tr. 76). the letter, he did state that the letter fit the mes- place her initials on it. This ‘‘usually’’ 40 According to Ms. Rogers, the course’s Site Host sage and represented the major theme of GOPAC at Coordinator, there was coordination between the that time. (7/17/96 Gingrich Tr. 60–61). message, the movement, and activists. ‘‘They were 37 Jana Rogers had not seen this letter before her 38 Both Dr. Mescon and Dr. Siegel of KSC were extensions of Newt and each had to make—each interview, but after reading it she said that through shown some of these letters. They both said that had group had to make sure—what I mean specifically is her work on the course, she believed the contents of they known of this intention in regard to the course, GOPAC and the class had to make sure that they the letter set out one of the goals of the Renewing they would not have viewed it as an appropriate were using the same message that Newt was trying American Civilization course. (7/3/96 Rogers Tr. 75– project for KSC. (6/13/96 Mescon Tr. 84–87; 6/13/96 to disseminate, that it was identical. 76). Siegel Tr. 60–62). (7/3/96 Rogers Tr. 54). H208 CONGRESSIONAL RECORD — HOUSE January 21, 1997 Mr. Gingrich: Absolutely; routinely and republican party that will frankly just inex- have a language to explain renewing Amer- petitively. orably crow[d] out the Democrats and turn ican civilization, a language to explain how Mr. Cole: And a campaign use of that? them into minority status. to replace the welfare state, and three topics Mr. Gingrich: Absolutely. (Ex. 56, GOPAC2 2155–2156). Mr. Gingrich told that are going to arouse volunteers and Mr. Cole: A partisan use, if you will? the audience that he would discuss three arouse contributions and help people say, Mr. Gingrich: Absolutely. areas in his remarks: (1) the principles of re- Yes, I want this done. Mr. Cole: And was there an effort to con- newing American civilization; (2) the prin- (Ex. 56, GOPAC2 2207).43 nect the Republicans with the opportunity ciples and skills necessary to be a ‘‘renewing society? candidate’’ and then ultimately a ‘‘renewing In a document that Mr. Gingrich appar- Mr. Gingrich: Absolutely. incumbent;’’ and (3) the concept and prin- ently wrote during this time (Ex. 89, Mr. Cole: A partisan use? ciples for creating a community among those Eisenach 2868–2869), the course is related to Mr. Gingrich: Yes, sir. who are committed to replacing the welfare the Renewing American Civilization move- Mr. Cole: And that was the main theme of state and renewing American civilization. ment in terms of winning a Republican ma- the course, was it not, replacement of the (Ex. 56, GOPAC2 2168). In speaking of the jority. The ‘‘House Republican Focus for welfare state with the opportunity society? first area, Mr. Gingrich said that it is a very 1994’’ is directed at having Republicans com- Mr. Gingrich: No. The main theme of the complicated subject. Because of this he was municate a positive message so that a major- course is renewing American civilization and only going to give a ‘‘smattering’’ of an out- ity of Americans will conclude that their the main subset is that you have—that you line at the training seminar. (Ex. 56, only hope for real change is to vote Repub- have to replace the welfare state with an op- GOPAC2 2170). He said, however, that in the lican. In describing that message, the docu- portunity society for that to happen. fall he planned to teach a twenty-hour ment states: (11/13/96 Gingrich Tr. 79–80). As referred to course on the subject, and then refine it and The Republican party can offer a better above, Mr. Gingrich held a training seminar teach it again over a four-year period. (Ex. life for virtually every one if it applies the for candidates on behalf of GOPAC at the 56, GOPAC2 2170). He then described the principles of American civilization to create Virginia Republican Convention in June 1993. three goals he had for the course: a more flexible, decentralized market ori- (7/15/96 Gaylord Tr. 29–30). He gave a speech First, we want to have by April of ’96 a ented system that uses the Third Wave of entitled ‘‘Renewing American Civilization’’ genuine intellectual blueprint to replace the change and accepts the disciplines of the which described the nature of the movement welfare state that you could look at as a cit- world market. and the course. (Ex. 56, GOPAC2 2146–2209). izen and say, yeah, that has a pretty good These ideas are outlined in a 20 hour intel- Near the beginning of his speech, Mr. Ging- chance of working. That’s dramatically bet- lectual framework ‘‘Renewing American Civ- rich said: ter than what we’ve been doing. ilization’’ available on National What I first want to suggest to you [is] my Second, we want to find 200,000 activist Empowerment Television every Wednesday personal belief that we are engaged in a citizens, and I hope all of you will be part of from 1 pm to 3 pm and available on audio great moral and practical effort, that we are this, committed at every level of American tape and video tape from 1–800–TO–RENEW. committed to renewing American civiliza- life to replacing the welfare state. Because tion, and I believe that’s our battle cry. That America is a huge decentralized country. (Ex. 89, Eisenach 2869). In a document dated we want to be the party and the movement You’ve got to have school boards, city coun- March 21, 1994, and entitled ‘‘RENEWING that renews American civilization and that cils, hospital boards, state legislatures, AMERICA: The Challenge for Our Genera- 44 renewing American civilization is both an county commissioners, mayors, and you’ve tion,’’ Mr. Gingrich described a relation- idealistic cause and a practical cause at the got to have congressmen and senators and ship between the course and the movement. same time. the President and governors, who literally (Ex. 90, GDC 00132–00152). Near the beginning (Ex. 56, GOPAC2 2146). He then told the audi- [sic] you take all the elected posts in Amer- of the document, one of the ‘‘key propo- ence that he has four propositions with ica and then you take all the people nec- sitions’’ listed is that the welfare state has which 80% to 95% of Americans will agree. essary to run for those posts and to help the failed and must be replaced with an oppor- These are: (1) there is an American civiliza- campaigns, etc., I think it takes around tunity society. (Ex. 90, GDC 00136). The option; (2) the four can’ts; (3) the welfare state 200,000 team players to truly change Amer- portunity society must be based on, among has failed; and (4) to renew American civili- ica. other things, the principles of American civilization. (Ex. 90, GDC 00136). The document zation it is necessary to replace the welfare (Ex. 56, GOPAC2 2170–2171). state. (Ex. 56, GOPAC2 2149–2153). 41 Mr. Ging- states that the key ingredient for success is rich then went on to relate the principles of Third, we create a process—and this is a movement to renew American civilization renewing American civilization to the Re- something you can all help with in your own by replacing the welfare state with an oppor- publican party: districts—we create a process interesting tunity society. (Ex. 90, GDC 00137). That We can’t do much about the Democrats. enough that the national news media has to movement will require at least 200,000 ‘‘part- They went too far to the left. They are still actually look at the material in order to ners for progress’’ committed to the goal of too far to the left. That’s their problem. But cover the course.42 replacing the welfare state with an oppor- we have a huge burden of responsibility to (Ex. 56, GOPAC2 2173). The transcript of his tunity society and willing to study the prin- change our behavior so that every one who speech goes on for the next 30 pages to de- ciples of American civilization, work on wants to replace the welfare state and every scribe the five pillars of American civiliza- campaigns, run for office, and engage in one who wants to renew American civilization that form the basis of the course, and other activities to further the movement. tion has a home, and it’s called being Repub- how to use them to get supporters for the (Ex. 90, GDC 00138).45 Under the heading lican. We have to really learn how to bring candidates’ campaigns. In discussing this Mr. ‘‘Learning the Principles of American Civili- them all in. Gingrich said: zation’’ the document states, ‘‘The course, And I think the first step of all that is to Now, let me start just as [a] quick over- ‘Renewing American Civilization’, is de- insist that at the core of identification the view. First, as I said earlier, American civili- signed as a 20 hour introduction to the prin- only division that matters is that question. zation is a civilization. Very important. It is ciples necessary to replace the welfare state You want to replace the welfare state and impossible for anyone on the left to debate with an opportunity society.’’ (Ex. 90, GDC renew American civilization. The answer is you on that topic. 00139). It then lists the titles of each class just fine, come and join us. And not allow and the book of readings associated with the the news media, not allow the Democrats, * * * * * course. The next section is titled ‘‘Connect- not allow interest groups to force us into But the reason I say that is if you go out ing the ‘Partners’ to the ‘Principles’.’’ (Ex. fights below that level in terms of defining and you campaign on behalf of American civ- 90, GDC 00140). It describes where the course who we are. That in any general election or ilization and you want to renew American is being taught, including that it is being of- any effort to govern that we are every one civilization, it is linguistically impossible to fered five times during 1994 on National who is willing to try to replace the welfare oppose you. And how is your opponent going Empowerment Television, and states that, state, and we are every one who is willing to to get up and say I’m against American civ- ‘‘Our goal is to get every potential partner renew American civilization. ilization? for progress to take the course and study the Now, that means there is a lot of ground in (Ex. 56, GOPAC2 2175–2176). Near the end of there to argue about details. Exactly how do the speech he said: 43 As discussed above, this speech was used by you replace the welfare state. Exactly which I believe, if you take the five pillars I’ve GOPAC to produce two training tapes. One was idea is the best idea. But if we accept every described, if you find the three areas that called ‘‘Renewing American Civilization’’ and the one coming in, we strongly change the dy- will really fit you, and are really in a posi- other was called ‘‘Leading the Majority.’’ (7/15/96 namics of exactly how this country is gov- tion to help you, that you are then going to Gaylord Tr. 31). erned and we begin to create a majority Re- 44 Mr. Gingrich at least wrote the first draft of this document and stated that it was compatible with 42 These are the same three specific goals that what he was doing at that time. It was probably a 41 These four propositions were used as the were listed in the document entitled ‘‘Renewing briefing paper for the House Republican members. ‘‘central propositions’’ or ‘‘heart’’ of the course to American Civilization Our Goal’’ that referred to (Ex. 90, GDC 00132–00152; 7/17/96 Gingrich Tr. 203–204). introduce each session in 1993 and 1994. (Ex. 54, PFF achieving a ‘‘sweeping victory in 1996’’ as the overall 45 In this section he defines the ‘‘partners for 18361, 18365–18367). goal. (Ex. 52, GDC 10647–10648). progress’’ as ‘‘citizens activists.’’ January 21, 1997 CONGRESSIONAL RECORD — HOUSE H209 principles.’’ (Ex. 90, GDC 00140).46 The docu- Minnix wrote that Mr. Gingrich ‘‘sees the a. restate our objective: Renewing Amer- ment then lists a number of areas where Re- course as vital to this—so vital that no one ican Civilization by replacing the paternalis- publicans can commit themselves to ‘‘real could convince him to teach it only one time tic welfare state change,’’ including the Contract with Amer- per week and conserve his energy.’’ (Ex. 92, —GOP majority in the House ASAP ica and a concerted effort to end the Demo- Reinhardt 0065).48 —nationwide GOP majority ASAP cratic majority in the House. (Ex. 90, GDC A number of other documents reflect a * * * * * 00144–00150). similar partisan, political use of the message and theme of Renewing American Civiliza- —objective: create ‘‘echo chamber’’ for A May 10, 1994 document which Mr. Ging- RAC rich drafted (7/18/96 Gingrich Tr. 234–235; 7/15/ tion. (Ex. 93, LIP 00602–00610, (‘‘Renewing 96 Gaylord Tr. 70) entitled ‘‘The 14 Steps[:] American Civilization: Our Duty in 1994,’’ a * * * * * Renewing American Civilization by replac- speech given to the Republican National i. develop RAC with an eye toward marketing the welfare state with an opportunity so- Committee January 21, 1994 Winter Break- ability ciety,’’ he notes the relationship between the fast); Ex. 94, GDC 11010–11012, (‘‘Whip Office * * * * * Plan for 1994’’ with the ‘‘vision’’ of ‘‘Renew course and the partisan aspects of the move- ii. promote message so that this defines ment. (Ex. 88, GDC 10729–10733). After stating American civilization by replacing the welfare state which requires the election of a many 1994 electoral contests at the congres- that the welfare state has failed and needs to sional level and below, and defines the 1996 be replaced (Ex. 88, GDC 10729), the document Republican majority and passage of our agenda’’); Ex. 95, GDC 10667–10670, (‘‘Planning national election. states that, ‘‘Replacing the welfare state will Assumptions for 1994’’); Ex. 96, Eisenach 2758– (Ex. 102, Gregorsky 0025).50 require a disciplined approach to both public 2777, (untitled); Ex. 97, PFF 2479–2489, (semi- The goal of the group was further defined policy and politics.’’ (Ex. 88, GDC 10730). ‘‘We nar on Renewing American Civilization in a memorandum written by one of Mr. must methodically focus on communicating given to the American Legislative Exchange Hoekstra’s staffers in September of 1993. (Ex. and implementing our vision of replacing the Council); Ex. 98, PFF 37179–37188, (‘‘House 103, Hoekstra 0266–0267). In that memoran- welfare state.’’ (Ex. 88, GDC 10730). In de- GOP Freshman Orientation: Leadership for dum, the staff member said the group’s goal scribing the replacement that will be needed, America’s 21st Century.’’)) had changed ‘‘from one of promoting the Re- Mr. Gingrich says that it: newing American Civilization course to one E. Renewing American Civilization House of proposing a ‘political platform’ around must be an opportunity society based on the Working Group principles of American civilization * * *. which House Republican incumbents and As stated in Mr. Gingrich’s easel notes candidates can rally.’’ (Ex. 103, Hoekstra These principles each receive two hours of from December 1992, one goal of the Renew- introduction in ‘Renewing American Civili- 0266). The group’s ‘‘underlying perspective’’ ing American Civilization movement was to was described as follows: zation’, a course taught at Reinhardt Col- ‘‘professionalize’’ the House Republicans. lege. The course is available on National (Ex. 42, HAN 02110). His intention was to use To expand our party, it is important that Empowerment Television from 1–3 P.M. the message of Renewing American Civiliza- Republicans develop, agree on and learn to every Wednesday and by videotape or audio- tion to ‘‘attract voters, resources and can- explain a positive philosophy of government. tape by calling 1–800–TO–RENEW. didates’’ and to develop a ‘‘mechanism for At the core of that philosophy is the obser- (Ex. 88, GDC 10730). This document goes on to winning seats.’’ (Ex. 42, HAN 02110). In this vation that the paternalistic welfare state describe the 200,000 ‘‘partners for progress’’ vein, a group of Republican House Members has failed, and must be replaced by alter- as being necessary for the replacement of the and others formed a working group to pro- native mechanisms within and outside of welfare state and how the Contract with mote the message of Renewing American government if social objectives are to be America will be a first step toward replacing Civilization. Starting in approximately June achieved. the welfare state with an opportunity soci- 1993, Mr. Gingrich sponsored Representative Fundamental to developing a new philoso- ety. (Ex. 88, GDC 10731). The document then Pete Hoekstra as the leader of this group and phy is the idea that traditions in American states: worked with him. (7/18/96 Gingrich Tr. 279).49 civilization have proven themselves to be powerful mechanisms for organizing human The Democrats are the party of the welfare According to a number of documents associ- behavior. There are working principles in the state. Too many years in office have led to ated with this group, a goal was to use the lessons of American history that can be ob- arrogance of power and to continuing viola- theme of renewing American civilization to served, and should be preserved and tions of the basic values of self-government. elect a Republican majority in the House. strengthened. Only by voting Republican can the welfare (Ex. 99, Hoekstra 0259; Ex. 101, Hoekstra 0264; These working principles distinguish the state be replaced and an opportunity society Ex. 102, Gregorsky 0025). According to notes Republican party and its beliefs from the be created. from a July 23, 1993 meeting, Mr. Gingrich addressed the group and made several points: Democratic party, which remains committed (Ex. 88, GDC 10731). On November 1, 1994, Mr. 1. Renewing American Civilization (RAC) to the welfare state even though these poli- Gingrich attended a meeting with Ms. is the basic theme; cies are essentially alien to the American ex- Minnix, his co-teacher at Reinhardt, to dis- 2. RAC begins with replacing the welfare perience. cuss the teaching of the course in 1995. (Ex. state, not improving it; (Ex. 103, Hoekstra 0266–0267). This group 92, Reinhardt 0063–0065). Also at that meeting 3. RAC will occur by promoting the use of began to develop a program to incorporate were Mr. Hanser, Ms. Desmond, Mr. the five pillars of American civilization; Renewing American Civilization into the Eisenach, and John McDowell. One of the 4. Use of the three key policy areas of sav- House Republican party. The program’s topics discussed at the meeting was Mr. ing the inner city, health, and economic goals included a House Republican majority, Gingrich’s desire to teach the course on a growth and jobs. Mr. Gingrich as Speaker, and Republican second day in Washington, D.C. According to (Ex. 101, Hoekstra 0264). The meeting then Committee Chairs. (Ex. 104, Hoekstra 0147– notes of the meeting prepared by Ms. Minnix, turned to a discussion of possible ways to 0151). To accomplish this goal, there were ef- Mr. Gingrich wanted to teach the course in improve these points. (Ex. 101, Hoekstra forts to have candidates, staffers and mem- D.C. in an effort: 0264). bers use Renewing American Civilization as To attract freshman congresspeople, the On July 30, 1993, another meeting of this their theme. (Ex. 104, Hoekstra 0148). One press—who will be trying to figure out the group was held. According to notes of that proposal in this area was a training program Republican agenda—and congressional staff meeting, the group restated its objectives as for staffers in the principles of Renewing looking for the basis of Republican doctrine. follows: American Civilization for use in their work ‘Take the course’ will be suggested to those in the House. (Ex. 104, Hoekstra 0148). A who wonder what a Republican government memorandum from Mr. Gingrich to various 48 The other participants at this meeting were members of his staffs 51 asked them to review is going to stand for. asked about this conversation. To the extent they a plan for this training program and give (Ex. 92, Reinhardt 0064).47 Later in the meet- recalled the discussion, they confirmed that it was him their comments. (Ex. 105, WGC 03732– ing Mr. Gingrich said that his chances of be- as related in Ms. Minnix’s memorandum. No one had a recollection that was contrary to Ms. Minnix’s 03745). coming Speaker were greater than 50 percent During his interview, Mr. Hoekstra stated and he was making plans for a transition 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 that Renewing American Civilization and from Democratic to Republican rule. Ms. Tr. 270–271; 7/17/96 Gingrich Tr. 211–215). the concept of replacing the welfare state 49 Mr. Gingrich provided Mr. Hoekstra with some was intended as a means of defining who Re- 46 The course was broadcast twice each week on materials to explain the movement. (See Ex. 99, publicans were; however, the group never fi- National Empowerment Television. In light of it Hoekstra 0259). Apparently, this material included nalized this as a project. (7/29/96 Hoekstra Tr. being a ten-week course, and being offered five times the May 13, 1993, three part document entitled ‘‘Re- 47–48). In talking about this group, Mr. Ging- during 1994 on NET, it ran for 50 weeks during this newing America Vision,’’ ‘‘Renewing America Strat- rich said that he wanted the Republican election year. In addition to being on NET, it was egies,’’ and ‘‘Renewing American Civilization Our also on a local cable channel in Mr. Gingrich’s dis- Goal.’’ (Ex. 52, GDC 10639–10649). In a memorandum trict in Georgia. (Ex. 91, DES 01048; 7/18/96 Gingrich from one of Mr. Hoekstra’s staffers analyzing the 50 Mr. Gingrich reviewed notes similar to these and Tr. 257–259). material, he lists the thirteen items that were to be though he did not specifically recall them, he said 47 Ms. Minnix stated that the word ‘‘Republican’’ done to further the movement. (Ex. 100, Hoekstra they were compatible with the activities of that may not have been specifically used by Mr. Ging- 0140b). They are the same thirteen items that are time. (7/18/96 Gingrich Tr. 283–284). rich, but that it was the context of his remark. (6/ listed in the ‘‘Renewing America Strategies’’ por- 51 This included his congressional office, his WHIP 12/96 Minnix Tr. 54–56). tion of the May 13, 1993 document. office, RAC, and GOPAC. H210 CONGRESSIONAL RECORD — HOUSE January 21, 1997 party to move toward Renewing American 1,000 College Republicans regarding the new nationally broadcast college course, Civilization as a theme and that he would course. 54 That letter states that: ‘‘Renewing American Civilization.’’ It prom- have asked the group to study the course, [C]onservatives today face a challenge ises to be an important event for all conserv- understand the ideas, and use those ideas in larger than stopping President Clinton. We atives, as well as many young people who are their work. (7/18/96 Gingrich Tr. 284–286). It is must ask ourselves what the future would be not yet conservatives. You and your organi- not known what became of this group. Mr. like if we were allowed to define it, and learn zation can be part of this project. Hoekstra said that the project ended without to explain that future to the American peo- (Ex. 110, PFF 19821). The letter goes on to any closure, but he does not recall how that ple in a way that captures first their imagi- say, ‘‘And remember, since you are a team happened. (7/29/96 Hoekstra Tr. 46). nation and then their votes. teacher you can use the course to explain F. Marketing of the Course In that context, I am going to devote much and discuss your views.’’ (Ex. 110, PFF 19821). As discussed above, Mr. Gingrich wrote in of the next four years, starting this Fall, to In the fall of 1993, Mr. DuGally arranged his March 29, 1993 memorandum that he teaching a course entitled ‘‘Renewing Amer- for a letter to be sent by Lamar Alexander wanted ‘‘Republican activists committed ican Civilization.’’ I am writing to you today on behalf of the Republican Satellite Ex- * * * to setting up workshops built around to ask you to enroll for the class, and to or- change Network promoting the course and the course, and to opening the party up to ganize a seminar so that your friends can en- asking its members to serve as site hosts. every citizen who wants to renew American roll as well. (Ex. 111, PFF 19795–19798). In addition, a let- civilization.’’ (Ex. 51, GDC 08892). There is ter was prepared for mailing to all chairmen evidence of efforts being made to recruit Re- * * * * * of the Christian Coalition asking them to publican and conservative organizations into Let me be clear: This is not about politics serve as site hosts. (Ex. 112, PFF 19815). In becoming sponsors for the course. These as such. But I believe the ground we will June of 1993, Mr. DuGally worked with the sponsors were known as ‘‘site hosts.’’ One of cover is essential for anyone who hopes to be Republican National Committee to have a the responsibilities of a site host was to re- involved in politics over the next several letter sent by Chairman Haley Barbour to cruit participants. (Ex. 106, PFF 8033). Jana decades to understand. American civilization RNC Members informing them of the course. Rogers was the Site Host Coordinator for the is, after all, the cultural glue that holds us (Ex. 113, RNC 0094). This letter did not solicit course when it was at Kennesaw State Col- all together. Unless we can understand it, people to be site hosts. lege. She stated that part of her work in re- renew it and extend it into the next century, Jana Rogers, the Site Host Coordinator for gard to the course involved getting Repub- we will never succeed in replacing the Wel- the course, attended the College Republican lican activists to set up workshops around fare State with an Opportunity Society. National Convention. Her weekly report on the course to bring people into the Repub- * * * * * the subject said the following: lican party. (7/3/96 Rogers Tr. 67–68). She said (Ex. 81, Mescon 0915; Meeks 0039). The letter The response to Renewing American Civili- there was an emphasis on getting Repub- ends by stating: zation at the College Republican National licans to be site hosts. (7/3/96 Rogers Tr. 69). Convention was overwelming [sic]. In addi- I have devoted my life to teaching and act- In an undated document entitled ‘‘VISION: tion to recruiting 22 sites and possibly an- ing out a set of values and principles. As a To Obtain Site Hosts for Winter 1994 Quar- other 30+ during follow-up, I was interviewed fellow Republican, I know you share those ter,’’ three ‘‘projects’’ are listed: (1) ‘‘To ob- by MTV about the class and learned more values. This class will help us all remember tain site hosts from conservative organiza- about RESN [Republican Exchange Satellite what we’re about and why it is so essential tions;’’ (2) ‘‘To secure site hosts from compa- Network] from Stephanie Fitzgerald who that we prevail. Please join me this Fall for nies;’’ (3) ‘‘To get cable companies to broad- does their site coordination. I also handed ‘‘Renewing American Civilization.’’ cast course.’’ (Ex. 107, PFF 7526). The ‘‘strat- out 400 Site Host Guides to College Repub- egies’’ listed to accomplish the ‘‘project’’ of (Ex. 81, Mescon 0914; Meeks 0040). GOPAC licans and about 600 registration flyers. obtaining site hosts from conservative orga- paid for this mailing (7/12/96 Eisenach Tr. 200; NCRNC says it will work aggressively with nizations are listed as: 7/15/96 Gaylord Tr. 82) and it was listed as a their state chairmen to help us set up sites Mailing to State and local leaders through ‘‘political’’ project on GOPAC’s description know [sic] that the convention is over. lists from National Republican Committee, of its ‘‘Major Projects Underway’’ for May 7, (Ex. 114, PFF 7613). She made no effort to Christian Coalition, American Association of 1993. (Ex. 79, JG 000001152). At the top of a contact any Democratic groups. (7/3/96 Rog- Christian Schools, U.S. Chamber of Com- copy of the letter to the College Republicans ers Tr. 78). merce, National Right to Life, Heritage is a handwritten notation to Mr. Gingrich In notes provided by Mr. Mescon from a Foundation, Empower America, National from Mr. Eisenach: ‘‘Newt, Drops to 1000+ meeting he attended on the course, he lists a Empowerment Television, Free Congress, C.R. Chapters on Wednesday. JE cc: Tim number of groups that would be targeted for etc. Mescon.’’ (Ex. 81, Mescon 0915, Meeks 0039). mailings on the course. They include mostly (Ex. 107, PFF 7526). One of the tactics listed During an interview with Mr. Cole, Mr. elected or party officials and the notation to accomplish the goal of obtaining more Eisenach was asked about this letter. ends with the words ‘‘25,000/total Republican site hosts is to: Mr. Eisenach: Use of the course by politi- mailing.’’ (Ex. 115, Mescon 0263). According Contact National College Republican office cal institutions in a political context was to Mr. Mescon, the course was being mar- to obtain names and addresses of all presi- something that occurred and was part of keted to Republicans as a target audience dents country-wide. Develop letter to ask Newt’s intent and was part of the intent of and he knew of no comparable mailing to college republicans to try to obtain the class other partisan organizations, but the intent Democrats. (6/13/96 Mescon Tr. 112–113). 55 for credit on their campus or to become a of the course and, most importantly, the op- In an August 11, 1993, memorandum from site host with a sponsor group. Also, ask eration of the course and its use of tax-ex- Mr. DuGally, a WPG employee who worked them to contact RAC office for a site host empt funds was always and explicitly done in on the course, he lists the entities where guide and additional information. a nonpartisan way. mailings for the course had been sent or were intended to be sent up to that point. They (Ex. 107, PFF 7527). In a memorandum writ- Political organizations—in this case, are as follows: ten by Nancy Desmond concerning the GOPAC—found it to their advantage to uti- course, among the areas where she suggested lize the course for a political purpose, and 1. GOPAC farm team—9,000 site host recruiting should be directed were they did so. 2. Cong/FONG/Whip offices—4,000 Mr. Cole: Were you involved in GOPAC? to ‘‘NAS members,’’ 52 ‘‘schools recognized as 3. Sent to site hosts—5,500 conservative’’ and ‘‘national headquarters of Mr. Eisenach: At this time I was involved 4. College Republicans—2,000 conservative groups.’’ (Ex. 108, PFF 37328– in GOPAC, yes. 5. American Pol Sci Assoc.—11,000 37330). In a number of the project reports Mr. Cole: And in making the decision that 6. Christian Coalition leadership—3,000 written by employees of the course in 1993, GOPAC would utilize the course? 7. The Right Guide list—3,000 there are notations about contacts with var- Mr. Eisenach: Yes. (Ex. 116, PFF 19794). In June of 1994, John ious Republicans in an effort to have them (7/12/96 Eisenach Tr. 203). Mr. DuGally McDowell wrote to Jeff Eisenach with his host a site for the course. There are no simi- worked with Economics America, Inc. to suggestions about where to market the lar notations of efforts to contact Demo- have them send a letter to the members of course during that summer. The groups he crats. (Ex. 109, Multiple Documents). 53 the groups listed in The Right Guide as part listed were the Eagle Forum Collegians; the In several instances mailings were made to of an effort to recruit them as site hosts. The National Review Institute’s Conservative Republican or conservative activists or orga- first paragraph of the letter states: Summit; Accuracy in Academia; Young Re- publicans Leadership Conference (Mr. nizations in an effort to recruit them as site Newt Gingrich asked that I tell the organi- McDowell was on their Executive Board); hosts. In May of 1993 a letter was sent over zations listed in The Right Guide about his Mr. Gingrich’s signature to approximately Young America’s Foundation, National Con- servative Student Conference; College Re- 54 Mr. Gingrich was shown this letter and he said publican National Conference; the American 52 According to Mr. Gingrich, the NAS (National that while he was not familiar with it, nothing in it Association of Scholars) is a conservative organiza- was particularly new. (7/17/96 Gingrich Tr. 87). Jeff tion. (7/18/96 Gingrich Tr. 345–346). Eisenach, GOPAC’s Executive Director and then the 55 Others who worked on the course also said it was 53 Mr. DuGally said that he made an effort to con- coordinator of the course, either wrote the letter or marketed to Republican and conservative groups. (7/ tact the Young Democrats, but they did not show edited it from a draft written by another GOPAC 3/96 Rogers Tr. 62–63; 6/13/96 Stechschulte Tr. 21–22, any interest. (7/19/96 DuGally Tr. 31–32). employee. (7/12/96 Eisenach Tr. 200–201). 57–58; 6/13/96 Desmond Tr. 66). January 21, 1997 CONGRESSIONAL RECORD — HOUSE H211 Political Science Association Annual Meet- pus!’’ (Ex. 117, PFF 3488). The faculty sponsor doing it. (6/13/96 Mescon Tr. 36, 44–45, 58–59; 6/ ing; 56 and the Christian Coalition, Road to for the student-initiated Renewing American 13/96 Fleming Tr. 23; 6/13/96 Siegel Tr. 78–79). Victory. (Ex. 117, PFF 3486–3489). At a num- Civilization course was William Muir, a KSCF did not manage the course. It con- ber of these meetings, Mr. Gingrich was former speechwriter for George Bush. (Ex. tracted with Mr. Eisenach’s Washington Pol- scheduled to be a speaker. (Ex. 117, PFF 3486– 121, JR–0000117). Aside from Mr. Sikorski and icy Group, Inc. (‘‘WPG’’) to manage and raise 3489). Mr. Muir, Mr. Eisenach did not know if the funds for the course’s development, produc- A site host listing dated August 18, 1994, RAC course at Berkeley had any additional tion and distribution. In return, WPG was identifies the approximately 100 site hosts as university review. (7/12/96 Eisenach Tr. 319). paid $8,750 per month. of that date. (Ex. 118, PFF 7493–7496). These The site host for the Renewing American The contract between WPG and KSCF ran include businesses, community groups, cable Civilization course at Harvard was Marty from June 1, 1993, through September 30, stations, and others. In addition, some col- Connors. (Ex. 122, LIP 00232). According to 1993.59 All funds raised were turned over to leges offered the course either for credit, Mr. Gingrich, Marty Connors is a conserv- KSCF and dedicated exclusively for the use partial credit or no credit. (Ex. 119, ative activist. (7/18/96 Gingrich Tr. 266). In a of the Renewing American Civilization Reinhardt 0160–0164). Based on their names, memorandum dated October 13, 1993, from course. KSCF’s only role was to act as the it was not possible to determine whether all Marty Connors to Lamar Alexander, Newt banker for the funds for the course and dis- of the site hosts fell within the goals set Gingrich, Ed Rogers, Jeff Eisenach, Paul burse them upon a request from Mr. Mescon. forth in the above-described documents. Weyrich, Mike Baroody, and Bill Harris, he (6/13/96 Fleming Tr. 24–25; 6/13/96 Mescon Tr. Some of them, however, were identifiable. wrote about a ‘‘series of ideas (that included 103; Ex. 124, KSF 001269, Mescon 0454, KSF For example, of the 28 ‘‘community groups’’ the Renewing American Civilization course) 003804, PFF 16934, KSF 001246). Mr. Mescon listed on the August 18, 1994 ‘‘Site Host List- that could have significant consequences in did not engage in a detailed review of the ing,’’ 11 are organizations whose names indi- building a new ‘Interactive’ communication bills. He merely reviewed the bills that were cate they are Republican or conservative or- system and message for the Republican provided by Mr. Eisenach or his staff and de- ganizations—Arizona Republican Party; Ath- Party and the conservative movement.’’ (Ex. termined whether the general nature of the ens Christian Coalition; Conservative PAC; 123, WGC 06781). He goes on to write that he bills fell within the parameters of the Henry County Republicans; Houston Young was working on a project to take the concept project of dissemination of the course. (6/13/ Republicans; Huron County Republican of the Republican Exchange Satellite Tele- 96 Mescon Tr. 61–63). Party; Las Rancheras Republican Women; vision, National Empowerment Television When the contract between WPG and Louisiana Republican Legislative Delega- and ‘‘Newt Gingrich’s ‘Renewing American KSCF ended, the Progress and Freedom tion; Northern Illinois Conservative Council; Civilization’ lectures and make them ‘‘more Foundation (‘‘PFF’’) assumed the role WPG Republican Party Headquarters (in Frank- interactive and user friendly.’’ (Ex. 123, WGC had with the course at the same rate of comfort Kentucky); Suffolk Republican Party. 06781). The purpose for this is to have a ‘‘far pensation. 60 PFF was also a 501(c)(3) tax ex- The list does not indicate whether the re- greater ability for ‘participatory’ party empt organization, but its status as such was maining groups—e.g., the Alabama Family building in the immediate future.’’ (Ex. 123, not used while the course was at KSC. Mr. Alliance; the Family Foundation (Ken- WGC 06781–06782). He goes on to write, Eisenach was the founder and president of tucky); Leadership North Fulton (Georgia); ‘‘Friends, I truly believe the next major po- PFF. the North Georgia Forum; Northeast Georgia litical advantage will go to the group that KSCF and KSC had little or no role in su- Forum; the River of Life Family Church figures out how to use ‘interactive’ commu- pervising the course or its dissemination. (Georgia)—are nonpartisan, Democratic, Re- Since the course was a ‘‘Special Topics’’ publican, liberal or conservative. The list nications in building a new Republican coali- 58 does not contain any organizations explicitly tion.’’ (Ex. 123, WGC 06782). course, it did not need to go through formal denominated as Democratic organizations. G. Kennesaw State College’s Role in the Course approval by a curriculum committee at KSC—it only required Mr. Mescon’s ap- Similarly, it is not clear whether there was Renewing American Civilization was proval. (6/13/96 Siegel Tr. 15–16, 30, 32, 76–77). a particular political or ideological predomi- taught at Kennesaw State College (‘‘KSC’’) While Mr. Mescon was given advance copies nance in the businesses, cable stations and in 1993. The sponsoring organization for the of Mr. Gingrich’s lectures, he had little input individuals listed.57 course was the Kennesaw State College into their content. (6/28/96 Hanser Tr. 22; 6/13/ Mr. Gingrich said that the efforts to re- Foundation (‘‘KSCF’’), a 501(c)(3) organiza- 96 Desmond Tr. 63). Mr. Mescon described his cruit colleges to hold the course had been tion dedicated to promoting projects at KSC. role more in terms of having his own 20 ‘‘very broad.’’ ‘‘I talked, for example, with The approximate expenditures for the course hours to put forth any counterpoint or objec- the dean of the government school at Har- at KSC was $300,000. This represented 29–33% tion to any of the material in Mr. Gingrich’s vard. Berkley [sic] actually was offering the of KSCF’s program expenditures for 1993. The lectures. (6/13/96 Mescon Tr. 40–41).61 course.’’ (7/18/96 Gingrich Tr. 346). The course funds raised for the course and donated to at Berkeley, however, did not go through the KSCF were tax-deductible. regular faculty review process for new KSCF had no role in raising funds for the 59 The contract between WPG and KSCF was never courses, because it was initiated by a stu- course. (6/13/96 Fleming Tr. 33–36). Mr. signed by KSCF. It was directed to Dr. Mescon, but he was not an authorized agent of KSCF. According dent. (7/12/96 Eisenach Tr. 316–317). Such Mescon, the course’s co-teacher and Dean of courses were not conducted by a professor, to Jeffery Eisenach, President of WPG, even though KSC’s Business School, wrote some letters the contract was not signed, it memorialized the but could be offered on campus for credit if with the help of Ms. Prochnow, GOPAC’s Fi- terms of the relationship between WPG and KSCF. a faculty member sponsored the course and nance Director (6/13/96 Mescon Tr. 65–68, 71– (Ex. 41, Mescon 0651–0652; 7/12/96 Eisenach Tr. 42; 11/ the Dean approved it. The student site host 74; 7/10/96 Prochnow Tr. 58–62, 66; 7/12/96 14/96 Eisenach Tr. 11). coordinator at Berkeley was named Greg Si- Eisenach Tr. 69), but most of the fundraising 60 Prior to assuming control of the course PFF was korski. (Ex. 121, JR–0000117). In the June 20, was coordinated by Mr. Eisenach, Ms. tasked with putting together the book of readings that were to be used for the course. This entailed 1994 memorandum from John McDowell to Prochnow, and Mr. Gingrich. (7/12/96 Mr. Eisenach, the following is written under Mr. Eisenach and Mr. Hanser editing the writings of Eisenach Tr. 68–71, 84, 97, 99; 7/17/96 Gingrich others. Mr. Hanser was paid $5,000 or $10,000 for this the heading ‘‘College Republican National Tr. 123, 136, 137). work, but Mr. Eisenach was not separately com- Conference:’’ ‘‘RAC Atlanta representative The course as offered at KSC was a forty- pensated for his role in this. (7/12/96 Eisenach Tr. 68). to attend and staff a vendor booth. These hour classroom lecture. Twenty hours were Mr. Eisenach was president of PFF, WPG, former 1,000 college students represent a good source taught by Mr. Gingrich and twenty hours Executive Director of GOPAC, and advisor to Mr. of future ‘Greg Sikorskis’ * * * in the sense were taught by Mr. Mescon. While officials Gingrich. Mr. Hanser was a close friend, confidant, that they can promote RAC on their cam- and at times a congressional employee of Mr. Ging- of KSC and KSCF considered the course to rich. He was also a board member and consultant to include the full forty hours of lecture (6/13/96 GOPAC and a board member and consultant to the 56 This is the only meeting where there is not a Mescon Tr. 38; 6/13/96 Fleming Tr. 23), only Progress and Freedom Foundation. (6/28/96 Hanser suggestion to have a Renewing American Civiliza- the twenty hours taught by Mr. Gingrich Tr. 6–10, 14). He had a substantial role in developing tion or PFF employee attend personally. Instead, were taped and disseminated. (6/13/96 Siegel the course. (6/28/96 Hanser Tr. 19–20). Mr. McDowell apparently only intended to find an Tr. 25–26; 6/13/96 Mescon Tr. 35; 6/13/96 Flem- 61 The December 8, 1994 letter from Mr. Gingrich to attendee who would be willing to pass out Renewing ing Tr. 23). The funds raised for the course the Committee states that, ‘‘Respected scholars American Civilization materials. such as James Q. Wilson, Everett Carl Ladd, and were primarily used for the dissemination of 57 Patti Hallstrom, an activist in the Arizona Re- Larry Sabato continue to contribute to and review publican Party, was instrumental in recruiting host Mr. Gingrich’s portion of the course to the course content.’’ (Ex. 138, p. 3). The same reference sites in Arizona, such as the Arizona Republican various site host locations. (6/13/96 Fleming to Mr. Wilson’s and Mr. Sabato’s review of the Party and various cable television stations. (Ex. 120, Tr. 22, 24; 6/13/96 Mescon Tr. 55–56). No one at course is contained in a September 3, 1993 memoran- PFF 7362). She prepared part of a training manual KSC or KSCF had any role in deciding which dum sent out over Jana Rogers’ name to site hosts. on how to recruit cable companies as host sites. (Ex. portions of the course would be taped and (Ex. 125, PFF 22963). However, in a letter from James 120, DES 00999–01007). She also provided the Renew- disseminated or even knew the reasons for Q. Wilson to Mr. Eisenach dated September 28, 1993, ing American Civilization project with information Mr. Wilson wrote: about which radio and talk shows in Arizona were Perhaps I don’t understand the purpose of the the most conservative as possible shows where Mr. 58 This memorandum was faxed to Mr. Gingrich. course, but if it is to be a course rather [than] a se- Gingrich could appear. She said the more conserv- The fax cover sheet has Mr. Gingrich’s name and the ries of sermons, this chapter won’t do. It is bland, ative shows would allow for a ‘‘more amenable dis- date ‘‘10/15/93’’ on it in his handwriting. As Mr. Ging- vague, hortatory, and lacking in substance. (empha- cussion.’’ (Ex. 120, DES 00262–00264; 6/20/96 Hallstrom rich has said, this probably indicates that he had sis in original) Tr. 41–43). seen this memorandum. (12/98/96 Gingrich Tr. 36–37). Continued H212 CONGRESSIONAL RECORD — HOUSE January 21, 1997

Shortly after PFF took over the manage- (Ex. 128, Reinhardt 0225).64 Because of this all he could from teaching the course and ment of the course, the Georgia Board of Re- concern, Reinhardt administrators agreed to had nothing new to say on the topics. (7/18/96 gents passed a resolution prohibiting any be involved only in the actual teaching of Gingrich Tr. 364). Mr. Gingrich refused to elected official from teaching at a Georgia the course on its campus and would not par- support the efforts of PFF in regard to the state educational institution. This was the ticipate in any other aspects of the project. course at that point, largely because he was culmination of a controversy that had arisen (6/12/96 Falany Tr. 51–53, 59–66; 6/12/96 Minnix disappointed with Mr. Eisenach’s financial around the course at KSC. The controversy Tr. 26–27).65 In this regard, Mr. Falany made management of the course. (7/18/96 Gingrich pertained to objections voiced by KSC fac- it clear to the faculty and staff at the college Tr. 365–366). Mr. Eisenach had indicated to ulty to the course on the grounds that it was that: Mr. Gingrich that the course was $250,000 in essentially political. (Ex. 127, KSC 3550–3551, It is important to understand that, for the debt and that PFF had used its own re- 3541, 3460, 3462). Because of the Board of Re- Winter Quarter 1994, the College will offer sources to cover this shortfall. (Ex. 130, GDC gent’s decision and the controversy, it was the course and teach it—that is the extent of 11325). Mr. Gingrich was skeptical of this decided that the course would be moved to a our commitment. At the present time, the claim, offered to have the records reviewed, private college. (7/12/96 Eisenach Tr. 47–50).62 Progress and Freedom Foundation will han- and stated that he would help raise any H. Reinhardt College’s Role in the Course dle all of the fund raising associated with the amount that the review disclosed was need- Reinhardt College was chosen as the new course; the distribution of tapes, text and ed. According to Mr. Gingrich, this offer was host for the course in part because of its tel- materials; the broadcasting; and the han- not pursued by Mr. Eisenach. (7/18/96 Ging- evision production facilities. (6/12/96 Falany dling of all information including the coordi- rich Tr. 367–368). Tr. 14). The 1994 and 1995 courses took place nation of off-campus sites. IV. ETHICS COMMITTEE APPROVAL OF COURSE at Reinhardt. While there, PFF assumed full (Ex. 129, Reinhardt 0265). 66 On May 12, 1993, Mr. Gingrich wrote the responsibility for the course. It no longer re- As was the case at KSC, Reinhardt admin- Committee asking for ‘‘guidance on the de- ceived payments to run the course. Rather, istrators considered the course to be the velopment of an intellectual approach to it paid Reinhardt to use the college’s video forty hours of lecture by both Mr. Gingrich new legislation that will be different from production facilities. All funds for the course and Ms. Minnix. (6/12/96 Falany Tr. 74–76). our normal activities.’’ (Ex. 131, p. 1). He said were raised by and expended by PFF under Again, only Mr. Gingrich’s portion of the that he wanted ‘‘to make sure that [his] ac- its tax-exempt status. The approximate ex- course was disseminated outside of tivities remain within a framework that penditures for the course were $450,000 in 1994 Reinhardt. (6/12/96 Falany Tr. 53–54; 6/12/96 meets the legitimate ethics concerns of the and in $450,000 in 1995. At PFF this rep- Minnix Tr. 48–49). Ms. Minnix had little con- House.’’ (Ex. 131, p. 1). He went on to describe resented 63% of its program expenditures for tact with Mr. Gingrich, and no input into the a course he was planning to teach in the fall its first fiscal year (which ended March 31, content of the course in 1994. In 1995 she had of 1993 at Kennesaw State College. 1994) and 35% of its program expenditures for only limited input into the content of the The course would be based on his January its second fiscal year (which ended March 31, course. (6/12/96 Minnix Tr. 20–22). Similarly, 25, 1993 Special Order entitled ‘‘Renewing 1995). 63 Mr. Gingrich and his associates provided no American Civilization.’’ (Ex. 131, p. 2). It Reinhardt had a curriculum committee re- input as to Ms. Minnix’s portion of the would be ‘‘completely non-partisan’’ and, he view the content of the course before decid- course. (6/12/96 Minnix Tr. 31–32). hoped, would include ideas from many peo- ing to have it presented on its campus. (6/12/ While Mr. Falany did not know the purpose ple, including politicians from both parties 96 Falany Tr. 15–16). The controversy over for disseminating the course, and made no and academics. (Ex. 131, p. 2). He stated that the course at KSC, however, affected the inquiries in that regard (6/12/96 Falany Tr. he believed the development of ideas in the level of involvement Reinhardt was willing 48–50; 54–66; 84–85), Ms. Minnix did have some course was a ‘‘crucial part’’ of his job as a to assume in regard to the course. (6/12/96 knowledge in this area. Based on her con- legislator. (Ex. 131, p. 3). He ended his letter Falany Tr. 44–48, 51–53, 59–66; 6/12/96 Minnix tacts with the people associated with the with a request to the Committee to meet to Tr. 26–27). In this regard, Reinhardt’s admin- course, she believed Mr. Gingrich had a glob- discuss the project if the Committee had any istration saw a distinction between the al vision of getting American civilization concerns. (Ex. 131, p. 3). ‘‘course’’ and a broader political ‘‘project.’’ back ‘‘on track’’ and that he wanted to shape In June 1993, counsel for the Committee, As stated in a memorandum from Mr. the public perception through the course. (6/ David McCarthy, met with Mr. Gingrich, two Falany, Reinhardt’s President, to Mr. 12/96 Minnix Tr. 59–60). She felt there was an people from his staff (Annette Thompson Eisenach dated November 11, 1993: ‘‘evangelical side’’ to the course, which she Meeks and Linda Nave) and Mr. Eisenach to First, there seems to be a ‘‘project’’, which described as an effort to have people get in- discuss the course. (7/18/96 McCarthy Tr. 7; 7/ is Renewing American Civilization, of which volved in politics, run for office, and try to 10/96 Meeks Tr. 13). Mr. McCarthy’s initial the ‘‘course’’ is a part. This distinction is influence legislation. (6/12/96 Minnix Tr. 70– concern was whether Mr. Gingrich could blurred at times in the Project Overview. 71). Ms. Minnix felt uncomfortable with this qualify for a teaching waiver under the When you refer to the ‘‘project’’ it seems to ‘‘evangelical side.’’ (6/12/96 Minnix Tr. 70). House ethics rules. (7/18/96 McCarthy Tr. 16). imply a broader political objective (a non- Furthermore, as reflected in her memoran- When he learned Mr. Gingrich was teaching welfare state). This is not to say that this dum of the November 1, 1994 meeting with without compensation, the issue of a teach- political objective should be perceived as Mr. Gingrich and others, she was aware that ing waiver became, in his opinion, irrele- being negative, but it should, in fact, be seen the course was to be used to let people know vant. (7/18/96 McCarthy Tr. 16). Mr. McCarthy as broader than and distinct from the sim- what Mr. Gingrich’s political agenda would then asked questions regarding whether any pler objective of the ‘‘course.’’ be as Speaker. (6/12/96 Minnix Tr. 53–59; Ex. official resources would be used to support 92, Reinhardt 0064). As with KSC, one of the the course and whether Mr. Gingrich planned *** reasons Reinhardt administrators wanted to to use any unofficial resources to subsidize I could go on, but I dare not for fear I have mis- have the course taught on its campus was to his official business. Mr. McCarthy did not understood what this enterprise is all about. I am a raise profile of the school. (6/12/96 Falany Tr. see any problems pertaining to these issues. professor, and so I bring the perspectives (and limi- 112–113). Mr. Gingrich indicated that he might repeat tations) of a professor to bear on this matter. If this is not to be a course but instead a sermon, then you I. End of Renewing American Civilization the lectures from the course as Special Or- should get a preacher to comment on it. Course ders on the floor of the House. Mr. McCarthy (Ex. 126, PFF 5994–5995). Also, in a book co-written Although Mr. Gingrich had intended to suggested that Mr. Gingrich consult with the by Larry Sabato, the following statements are teach the course for four years, through the House Parliamentarian on that subject. (Ex. made: 1996 Winter quarter, he stopped teaching it 132, p. 1). In late 1992 and early 1993, Gingrich began conceiv- after the 1995 Winter quarter. According to One issue raised with Mr. McCarthy was ing a new way to advance those political goals—a most of the witnesses interviewed on this whether the House Ethics Rules permitted nationally broadcast college course, ambitiously ti- Mr. Gingrich to raise funds for a tax-exempt tled ‘‘Renewing American Civilization,’’ in which he subject, the reason for this was that he had would inculcate students with his Republican val- run out of time in light of the fact that he organization. Mr. McCarthy’s conclusion was ues. (p. 94). had become Speaker. (7/12/96 Eisenach Tr. that since KSCF was a qualified tax-exempt *** 280; 6/28/96 Hanser Tr. 52–53). On the other organization, Mr. Gingrich could raise funds Nominally an educational enterprise, internal hand, Mr. Gingrich says that he had learned for KSCF as long as he complied with the course planning documents revealed the true nature relevant House rules on the subject. (7/18/96 of the course as a partisan organizing tool. (p. 95). McCarthy Tr. 17). Mr. Eisenach raised the Sabato, L. and Simpson, G., ‘‘Dirty Little Secrets: 64 Reinhardt saw the ‘‘project’’ as essentially deal- issue concerning the propriety of his being The Persistence of Corruption in American Poli- ing with the dissemination of the course outside of tics,’’ Times Books (1996). Reinhardt’s campus. (6/12/96 Falany Tr. 48–50, 54–66, involved in fundraising for the course in 62 Near the end of his interview, Mr. Mescon ex- 84–85). light of the fact that he also worked for pressed embarrassment in regard to his participa- 65 All of the funds for the course while at GOPAC. According to Mr. McCarthy, his re- tion in the course. He became involved in the course Reinhardt were raised by PFF under its tax exempt sponse to the issue was as follows: in order to raise the profile of the school, but now status. [T]o my knowledge of tax law, the issue of believes that his efforts have had severe repercus- 66 Reinhardt College did rent its television produc- sions. (6/13/96 Mescon Tr. 136–137). tion facilities to PFF for its use in the dissemina- whether the contributions in support of the 63 As of November 1996, PFF’s tax return (Form tion in the course, and was paid separately for this course would keep their tax-deductible sta- 990) for its third fiscal year (which ended March 31, in the amount of $40,000. All production beyond that tus would turn not on who did the fundrais- 1996) had not been filed. was handled by PFF. (6/12/96 Falany Tr. 27–28). ing but on how the funds were spent, and January 21, 1997 CONGRESSIONAL RECORD — HOUSE H213 that the educational nature of the course On August 3, 1993, the Committee, in a let- an impermissible private benefit on Repub- spoke for itself. I told him that I was aware ter signed by Mr. McDermott and Mr. lican candidates and entities. of no law or IRS regulation that would pre- Grandy, responded to Mr. Gingrich’s letters Prior to his involvement in both AOW/ vent Eisenach from raising charitable con- of May 12, 1993 and July 21, 1993, regarding ACTV and the Renewing American Civiliza- tributions, even at the same time that he his request to the teach the course and his tion course, Mr. Gingrich was aware of the was raising political contributions. In any request to present the course materials in tax controversy pertaining to the American event, I advised him, I expected the Commit- Special Orders. (Ex. 134, p. 1). The Commit- Campaign Academy (‘‘ACA’’ or ‘‘Academy’’). tee to stick by its advisory opinion in the tee’s letter also notes that Mr. Gingrich had In his interview with Mr. Cole he said, ‘‘I was Ethics Manual and not get into second- asked if he could help KSC raise funds for aware of [ACA] because * * * the staff direc- guessing the IRS on its determinations of the course. The Committee’s guidance was as tor of the [ACA] had been totally involved. I tax-exempt status. follows: was aware of his briefings and what was in- (Ex. 132, p. 2). Mr. McCarthy said in an inter- 1. Since Mr. Gingrich was teaching the volved. * * * I was aware of them at the time view that his statement regarding the Com- course without compensation, he did not and I was aware of them during the court mittee’s ‘‘stick[ing]’’ by its advisory opinion need the Committee’s approval to do so; case.’’ (7/18/96 Gingrich Tr. 375–376). ‘‘I lived pertained only to whether Mr. Gingrich 2. It was within Mr. Gingrich’s ‘‘official through that case. I mean, I was very well could raise funds for the course. (7/18/96 prerogative’’ to present the course materials aware of what the [American Campaign McCarthy Tr. 19). The discussion did not rein Special Orders; Academy] did and what the ruling was.’’ (11/ late to any other 501(c)(3) issues. (7/18/96 3. Mr. Gingrich was permitted to raise 13/96 Gingrich Tr. 61). 69 McCarthy Tr. 19). While Mr. McCarthy was funds for the course on behalf of charitable Responding to the question of whether he aware that the course lectures would be organizations, ‘‘provided that no official re- had any involvement with the Academy, Mr. taped and broadcast (7/18/96 McCarthy Tr. 16), sources are used, no official endorsement is Gingrich said: ‘‘I think I actually taught neither Mr. Gingrich nor his staff asked for implied, and no direct personal benefit re- that [sic], but that’s the only direct involve- Mr. McCarthy’s advice regarding what ac- sults.’’ ment I had.’’ (12/9/96 Gingrich Tr. 58). In an tivities in that regard were permissible undated document on GOPAC stationery en- under 501(c)(3) and Mr. McCarthy did not dis- (Ex. 134, p. 1). The Committee, however, ad- titled ‘‘Offices of Congressman Newt Ging- cuss such issues. (7/18/96 McCarthy Tr. 19; 7/ vised Mr. Gingrich to consult with the FEC rich,’’ three offices are listed: GOPAC, 18/96 Gingrich Tr. 375–376; 7/10/96 Meeks Tr. regarding whether election laws and regula- FONG, and the American Campaign Acad- 15). Mr. McCarthy did not recall any discus- tions might pertain to his fundraising ef- emy. (Ex. 143, Kohler 285). Mr. Gingrich did sion regarding a Renewing American Civili- forts. The Committee’s letter to Mr. Ging- not believe that he had an office at the Acad- zation movement. (7/18/96 McCarthy Tr. 16). rich did not discuss any matters relating to emy, but thought it possible that his press Mr. McCarthy did not recall any discussion the implications of 501(c)(3) on the teaching secretary, Rich Galen, had an office there. of GOPAC’s use of the Renewing American or dissemination of the course or GOPAC’s (12/9/96 Gingrich Tr. 58–59). Civilization message. (7/18/96 McCarthy Tr. relationship to the course. (Ex. 134, p. 1). In speaking about the Renewing American 12–13). The discussion pertaining to Mr. V. LEGAL ADVICE SOUGHT AND RECEIVED Civilization course, Mr. Gingrich told the Eisenach and GOPAC was brief. (Ex. 132, p. New York Times that he acted very aggres- 2). As described in greater detail in the Ap- sively in regard to 501(c)(3) law: During the meeting with Mr. McCarthy, pendix, section 501(c)(3) requires, among ‘‘Whoa,’’ [Mr. Gingrich] said, when asked there were no questions posed about 501(c)(3) other things, that an organization be orga- after class one recent Saturday if the course or what could be done in regard to the nized and operated exclusively for one or nears the edge of what the law allows. ‘‘Goes course, aside from the fund-raising issue more exempt purposes. Treas. Reg. right up to the edge. What’s the beef? under 501(c)(3). (7/18/96 Gingrich Tr. 375–376). 1.501(c)(3)–1(d)(1)(ii) provides that an organi- Doesn’t go over the edge, doesn’t break any Mr. Gingrich did not believe that it was nec- zation does not meet this requirement: Un- law, isn’t wrong. It’s aggressive, it’s entre- essary to explain to Mr. McCarthy his in- less it serves a public rather than a private preneurial, it’s risk taking.’’ tended use for the course. purpose. It is necessary for an organization New York Times, section A, page 12, column 1 Mr. Cole: We are focusing, however, on to establish that it is not organized or oper- (Feb. 20, 1995). (Ex. 144). In addition, Mr. your intended use of the course. And your in- ated for the benefit of private interests such Gingrich has had involvement with a number tended use of the course here was in a par- as designated individuals, the creator or his of tax-exempt organizations. As Mr. Ging- tisan political fashion; is that correct? family, or persons controlled, directly or in- rich’s tax lawyer stated, politics and 501(c)(3) Mr. Gingrich: My intended use was, but I directly, by such private interests. organizations are an ‘‘explosive mix.’’ (12/12/ am not sure I had any obligation to explain The purpose of the ‘‘private benefit’’ prohi- 96 Holden Tr. 132–134, 146). that to the [C]ommittee. As long as the bition is to ensure that the public subsidies Despite all of this, he did not seek specific course itself was nonpartisan and the course flowing from section 501(c)(3) status, includ- legal advice concerning the application of itself was legal and the course itself met ing income tax exemption and the ability to section 501(c)(3) with respect to AOW/ACTV both accreditation and tax status, I don’t be- receive tax-deductible charitable contribu- or the Renewing American Civilization lieve I had an obligation to tell the Ethics tions, are reserved for organizations that are course. Furthermore, he did not know if any Committee what my political strategies formed to serve public, not private interests. one did so on his behalf. With respect to the were. I think that’s a retrospective com- Treas. Reg. 1.501(c)(3)–1(c)(1) defines the ap- course, the following exchange occurred: ment. And maybe I am wrong. plication of the private benefit prohibition Mr. Cole: Were you involved in seeking any I don’t think—the questions were: Was it in the context of the operational test: An or- legal advice concerning the operation of the legal? Did I use official funds? Had we gotten ganization will be regarded as ‘‘operated ex- course under 501(c)(3)? approval? Was GOPAC’s involvement legiti- clusively’’ for one or more exempt purposes Mr. Gingrich: No. We sought legal advice mate and legal? Was it an accredited course? only if it engages primarily in activities about ethics. Was I getting paid for it? which accomplish one or more of such ex- Mr. Cole: Did you seek any legal advice I mean, none of those questions require empt purposes specified in section 501(c)(3). concerning the 501(c)(3) issues involving the that I explain a grand strategy, which would An organization will not be so regarded if course? have seemed crazy in ’94. If I had wandered more than an insubstantial part of its activi- Mr. Gingrich: No. I did not. around and said to people, hi, we are going to ties is not in furtherance of an exempt pur- Mr. Cole: Do you know if anybody did on win control, reshape things, end the welfare pose. your behalf? entitlement, form a grand alliance with Bill Although cases on the private benefit doc- Mr. Gingrich: No. Clinton, who is also going to join us in re- 68 trine date back to 1945, a more recent, sig- (7/17/96 Gingrich Tr. 140). With respect to newing America, how would I have written nificant case on the subject is the 1989 Tax AOW/ACTV, Mr. Gingrich said that he did that? Court opinion in American Campaign Academy not get any legal advice regarding the (11/13/96 Gingrich Tr. 89–90). On July 21, 1993, v. Commissioner, 92 T.C. 1053 (1989). That case projects. (12/9/96 Gingrich Tr. 54). He said Mr. Gingrich wrote the Committee to pro- discusses the doctrine in terms of conferring that he assumed Mr. Callaway sought such vide additional information about the course legal advice. (12/9/96 Gingrich Tr. 54). he planned to teach at KSC. The letter did Kennesaw State College, was providing him with a Mr. Gingrich said two attorneys involved not discuss how the course was to be funded ‘‘Content Coordinator to coordinate the videotape with GOPAC at the time, Jim Tilton and or that there was a plan to distribute the inserts and other materials that will be used in the Dan Swillinger, monitored all GOPAC activi- course nationally via satellite, videotape, presentations.’’ (Ex. 133, pp. 1–2). He also wrote that ties and would have told him if the projects audiotape and cable, or that GOPAC’s main none of his staff would perform tasks associated violated the law. (12/9/96 Gingrich Tr. 54–56). theme was to be ‘‘Renewing American Civili- with the course and that the course material would zation.’’ The letter also did not discuss not be based on previous work of his staff. (Ex. 133, 69 GOPAC’s role in the course. (Ex. 133).67 p. 1). Finally, he wrote that much of the material His adviser, Mr. Gaylord, was a director of the from the course would be presented in Special Or- Academy. (12/9/96 Gingrich Tr. 57; American Campaign ders, although the presentations would have some Academy v. Commissioner, 92 T.C. 1053, 1056 (1989)). As 67 The information Mr. Gingrich provided to the differences. (Ex. 133, p. 2). referred to above, Mr. Gaylord was one of the ‘‘five Committee was that the Kennesaw State College 68 Better Business Bureau of Washington, D.C. v. key people’’ Mr. Gingrich relied on most. (Ex. 3, Foundation, a 501(c)(3) organization affiliated with United States, 326 U.S. 279 (1945). GDC 11551, GDC 11553). H214 CONGRESSIONAL RECORD — HOUSE January 21, 1997 Mr. Callaway said neither Mr. Swillinger nor Shouldn’t that have been presented to [Third,] I think everybody who has actu- Mr. Tilton was ever told that one of the pur- somebody who is a tax attorney, and said, ally seen my course will tell you * * * I was poses of ACTV was to recruit people to the now, am I going to have any problems here? very careful. Ironically, Max Cleland, who Republican party. (12/7/96 Callaway Tr. 41, Is this okay under the 501(c)(3) laws? won the Senate seat, is the only current poli- 47). 70 (12/10/96 Gingrich Tr. 32–33). In response to tician used in the course other than John Mr. Gingrich explained to the Subcommit- Lewis. tee in November 1996 that, in his opinion, Mr. Schiff’s question, Mr. Gingrich explained why he thought there was no need to seek And so the course was clearly not Repub- there were no ‘‘parallels’’ between the Amer- lican. It was clearly not designed to send a ican Campaign Academy and the Renewing legal advice because the facts of American Campaign Academy and Renewing American partisan message. No one I know of who has American Civilization course. (11/13/96 Ging- actually seen the course thinks that it was a rich Tr. 61). After this explanation, Mr. Civilization were inapposite. (12/10/96 Ging- rich Tr. 34–36). partisan vehicle. It has no relationship to Schiff and Mr. Gingrich had the following ex- the American Campaign Academy. change: Mr. Gingrich: The facts are the key. I was teaching at an accredited university; [ACA] (12/10/96 Gingrich Tr. 37–39). Officials at KSC Mr. Schiff: Did you go to a tax expert and and Reinhardt did not seek legal advice per- say, here is what I have in mind; do you was an institution being set up as basically a politically training center. My course was taining to the application of 501(c)(3) to the agree that there are no parallels and that course. The only such advice ever sought was there’s no problem with the American Cam- open to everybody; [ACA] was a Republican course. My course says nothing about cam- by KSCF in connection with the agreement paign Academy case in terms of what I am to transfer the course to PFF in November doing here? I am just asking if you did that? paigns; [ACA] was a course specifically about campaigns. 1993 and in asking its outside lawyers to Mr. Gingrich: The answer is, no. I just render a legal opinion concerning the course want to assert the reason I wouldn’t have There are four standards * * * none of which apply to Renewing American Civiliza- in 1995. Citing the attorney/client privilege, done it is as a college teacher who had KSCF officials have refused to disclose to taught on a college campus I didn’t think tion. * * * Just at an objective level you are going to put these [ACA and RAC] up on a the Subcommittee the advice KSCF received the two cases—I also didn’t ask them if it rein both instances. (6/13/96 Mescon Tr. 60; 6/13/ lated to spouse abuse. I mean, I didn’t think board and say that is not a relevant question. 96 Siegel Tr. 36–37; 6/12/96 Falany Tr. 50–51; 6/ the two cases had any relationship. 13/96 Fleming Tr. 46–48). (11/13/96 Gingrich Tr. 61–62). During his testi- (12/10/96 Gingrich Tr. 35). After Mr. Gingrich’s In his July 1996 interview, Mr. Eisenach mony before the Subcommittee in December, explanation, Mr. Schiff said the following: said that he did not seek legal advice per- Mr. Schiff raised similar questions with Mr. Mr. Schiff: I understand how you distin- taining to the application of 501(c)(3) to the Gingrich. guish the facts between the American Cam- course. (7/12/96 Eisenach Tr. 236). In his No- Mr. Schiff: What strikes me is without try- paign Academy case and your course. There vember 1996 interview, Mr. Eisenach said ing to resolve that at this minute, the possi- are those that would argue that the legal that he had worked with many attorneys bility is out there, the possibility that a vio- holding applies equally to both. In other who had experience in 501(c)(3) law. (11/14/96 lation of 501(c)(3) is very much in evidence to words, that which brings you to the legal Eisenach Tr. 84–88). But he was not able to me. And it seems to me that is true all the conclusion of not complying with the point to any specific consultation with a tax way along. You did have the American Cam- 501(c)(3) laws, for various reasons that I’d attorney where the entire relationship be- paign Academy case of 1989, which you have rather not get into now—discuss with Mr. tween the course, the movement, and politi- indicated you were aware of. It’s true the Holden, perhaps—that those are in common cal goals were fully set forth and found to be within the bounds of 501(c)(3). (11/14/96 facts were different, but nevertheless some- even if certain peripheral facts are different. Eisenach Tr. 88–91). thing sprung up that told somebody there What I’m getting at is, excuse me for using was a 501(c)(3) problem here if you get too your own words, but you’re not a lawyer. VI. SUMMARY OF THE REPORT OF THE close to political entities. Knowing that there was an attempt to set up SUBCOMMITTEE’S EXPERT What I am getting at is this, and again to a 501(c)(3) training and education academy A. Introduction answer any way you wish, wasn’t it, if not which floundered in the courts because of Because of differences of opinion among intentional, wasn’t it reckless to proceed something, wouldn’t that motivate particu- the Members of the Subcommittee regarding with your involvement as a Member of the larly a Member of the House to want to say, the tax issues raised in the Preliminary In- House of Representatives into at least a cou- before you start into another one, maybe I quiry, the Subcommittee determined that it ple of—involvements with the 501(c)(3) orga- ought to sit down with somebody who is a would be helpful to obtain the views of a rec- nizations, whether it was Progress & Free- tax expert and tell them the whole plan here, ognized expert in tax-exempt organizations dom or Kennesaw State or Abraham Lincoln not just course content, but where the course law, particularly with respect to the ‘‘pri- Opportunity Foundation, without getting ad- fits into all the strategies here and say, now, vate benefit’’ prohibition. The expert, Celia vice from a tax attorney to whom you told do you think I’ve got a problem? And I don’t Roady, reviewed Mr. Gingrich’s activities on everything? You said, this is the whole plan, think you did that. If you did, tell me you behalf of ALOF and the activities of others this is the whole movement of Renewing did. * * * on behalf of ALOF with Mr. Gingrich’s American Civilization. * * * (12/10/96 Gingrich Tr. 36–37). Mr. Gingrich’s knowledge and approval. She also reviewed response was three-fold: Mr. Gingrich’s activities on behalf of KSCF, PFF, and Reinhardt College in regard to the 70 A document dated November 13, 1990, entitled Mr. Gingrich: [First,] [i]f you read the Campaign For A Successful America, was reviewed by speech I gave in January of 1993, which was Renewing American Civilization course and the Subcommittee. (Ex. 145, Eisenach 3086–3142). In a the core document from which everything the activities of others on behalf of those or- section drafted by Gordon Strauss, an attorney in else comes, I talk very specifically about a ganizations with Mr. Gingrich’s knowledge Ohio, for a consulting group called the Eddie Mahe movement in the speech. I talk very simply and approval. The purpose of this review was Company, the following is written: about 2 million, not 200,000, volunteers, citi- to determine whether those activities vio- [S]ome educational organizations, tax exempt lated the status of any of these organizations under Section 501(c)(3) of the Internal Revenue Code, zen activists, in the speech. I describe it as a cultural movement that has a political com- under section 501(c)(3) of the Internal Reve- have engaged in activities which affect the outcome nue Code. of elections, though that is theoretically not sup- ponent in the speech. posed to occur. That’s the core document I gave to every- B. Qualifications of the Subcommittee’s Expert (Ex. 145, Eisenach 3132). The document also con- one when I would say, here’s what I want to Ms. Roady is a partner in the Washington, tains the following: try to teach about. Here is what I want to D.C. office of the law firm Morgan, Lewis & A very controversial program is being undertaken try to do. That document clearly says there Bockius LLP where she specializes full-time by a (c)(3), indicating that it may have involvement in the electorial process, notwithstanding the ex- is a movement, and this course is designed to in the representation of tax-exempt organi- press prohibition on it. At this time, a (c)(3) is not outline the principles from which the move- zations. Her practice involves the provision recommended because it would have to be truly ment comes. And so, if everybody who was of advice on all aspects of section 501(c)(3). independent of the (c)(4) and its PAC. engaged in looking at the course, whether it Ms. Roady has written many articles on tax- (Ex. 145, Eisenach 3134). was Kennesaw Foundation’s lawyers or it exempt organization issues for publication in There was substantial inquiry about this docu- was Progress & Freedom’s lawyers or it was legal periodicals such as the ‘‘Journal of ment during the Preliminary Inquiry. No evidence Reinhardt’s lawyers, and the president of the Taxation of Exempt Organizations’’ and the was uncovered to indicate that Mr. Gingrich had any exposure to this document. (12/5/96 Mahe Tr. 34–35; 12/ college in both cases, everybody had a ‘‘Exempt Organization Tax Review.’’ She is a 9/96 Gingrich Tr. 52–54; 12/5/96 Eisenach Tr. 59–61). Mr. chance to read the core document which has frequent speaker on exempt organizations Strauss was interviewed and stated that the docu- movement very specifically in it. topics, regularly lecturing at national tax ment had nothing to do with AOW/ACTV, the Second, the reason I didn’t seek unique conferences such as the ALI/ABA conference 501(c)(3) organization referred to in the document legal counsel is as a Ph.D. teaching in a on charitable organizations and the George- was merely one he had heard of in an IRS Revenue State college in an accredited setting, it town University Law Center conference on Ruling, and that he never gave Mr. Gingrich any ad- never occurred—I mean, if I had thought— tax-exempt organizations, as well as at local vice on the law pertaining section 501(c)(3) in regard to AOW/ACTV, the Renewing American Civilization this is another proof of my ignorance or tax conferences and seminars on tax-exempt course, or any other projects. The only legal advice proof of my innocence, I’ll let you decide—it organization issues. In 1996, she was named he gave Mr. Gingrich pertained to need for care in never occurred to me that this is an issue. the Program Chair of the Georgetown Uni- the use of official resources for travel expenses. *** versity Law Center’s annual conference on January 21, 1997 CONGRESSIONAL RECORD — HOUSE H215 tax-exempt organizations. (11/15/96 Roady Tr. With respect to the last two issues, Ms. continuation of GOPAC’s AOW project, and 2–7). Roady did not conclude that the activities had the same partisan, political goals as Ms. Roady is the immediate past Chair of with respect to the television programs or AOW. These goals included, among other the Exempt Organizations Committee of the the course resulted in impermissible private things, reaching ‘‘new groups of voters not Section of Taxation of the American Bar As- inurement or violated the lobbying limita- traditionally associated with [the Repub- sociation, having served as Chair from 1993 tions applicable to section 501(c)(3) organiza- lican] party;’’ ‘‘mobiliz[ing] thousands of to 1995. She is currently serving a three-year tions. Similarly, with respect to the first people across the nation at the grass roots term as a member of the Council of the ABA issue, Ms. Roady concluded that the tele- level [to become] dedicated GOPAC activ- Section of Taxation, and is the Council Di- vision programs and the course met the re- ists;’’ and ‘‘making great strides in continu- rector for the Section’s Exempt Organiza- quirements of the methodology test de- ing to recruit activists all across America to tions Committee. She also serves on the scribed in Rev. Proc. 86–43 and were ‘‘edu- become involved with the Republican party.’’ Legal Section Council of the American Soci- cational’’ within the meaning of section The persons who conducted the ACTV ety of Association Executives, and is a Fel- 501(c)(3) even though they advocated particu- project on behalf of ALOF were GOPAC offi- low of the American College of Tax Counsel. lar viewpoints and positions. Accordingly, cers, employees, or consultants. In essence, (11/15/96 Roady Tr. 2–7). Ms. Roady concluded that the activities with the transfer of the AOW project from GOPAC Ms. Roady served a three-year term as the respect to the television programs and the to ALOF was more in name than substance, Co-Chair of the Exempt Organizations Com- course served an educational purpose and since the same activities were conducted by mittee of the District of Columbia Bar’s Tax would be appropriate activities for section the same persons in the same manner with Section from 1989 to 1991. She also served on 501(c)(3) organizations, as long as there was the same goals. Through the use of ALOF, the Steering Committee of the D.C. Bar’s no violation of the private benefit prohibi- however, these persons were able to raise Tax Section from 1989 to 1995, and as Co- tion or the campaign intervention prohibi- tax-deductible charitable contributions to Chair of the Steering Committee from 1991 to tion. She found substantial evidence, how- support the ACTV project, funding that 1993. (11/15/96 Roady Tr. 2–7). ever, of violations of both such prohibitions would not have been available to GOPAC on Each of the attorneys interviewed for the and therefore concluded that Mr. Gingrich’s a tax-deductible basis. position of expert for the Subcommittee activities on behalf of the organizations and Taken together, according to Ms. Roady, highly recommended Ms. Roady. She was de- the activities of others on behalf of the orga- the facts as described above show that in ad- scribed as being impartial and one of the nizations with Mr. Gingrich’s knowledge and dition to its educational purpose, another leading people in the field of exempt organi- approval violated the organizations’ status purpose of the ACTV project was to benefit zations law. (11/15/96 Roady Tr. 2).71 under section 501(c)(3). (11/15/96 Roady Tr. 7). GOPAC and, through it, Republican entities Ms. Roady is a 1973 magna cum laude grad- The basis for her conclusions may be summa- and candidates, by continuing to conduct the uate of Duke University. She received her rized briefly as follows: AOW project under a new name and through law degree from Duke Law School, with dis- a section 501(c)(3) organization that could 1. THE AMERICAN CITIZENS TELEVISION tinction, in 1976. She received a masters de- raise funding for the project through tax-de- PROGRAM OF ALOF 73 gree in taxation from the Georgetown Uni- ductible charitable contributions. This bene- versity Law Center in 1979. a. Private benefit prohibition fit was not merely incidental. To the con- C. Summary of the Expert’s Conclusions Under section 501(c)(3) and the other legal trary, the evidence supports a finding that authorities discussed above, the analysis of Ms. Roady considered the following issues one of the main purposes for transferring the whether there is a violation of the private in her review: project to ALOF was to make possible the benefit prohibition does not depend on 1. whether the content of the television continuation of activities that substantially whether the activities at issue—the tele- programs broadcast by ALOF or the Renew- benefited GOPAC and Republican entities vision programs—served an exempt purpose. ing American Civilization course were ‘‘edu- and candidates. Even though the television programs met For these reasons, Ms. Roady concluded cational’’ within the meaning of section the definition of ‘‘educational,’’ there is a that one of the purposes of Mr. Gingrich’s ac- 501(c)(3); violation of section 501(c)(3) if another pur- tivities on behalf of ALOF and the activities 2. whether one of the purposes of the ac- pose of the activities was to provide more of others on behalf of ALOF with Mr. Ging- tivities with respect to the television pro- than an insubstantial or incidental benefit rich’s knowledge and approval was to provide grams or the course was to provide more to GOPAC or any other private party. As the more than an incidental benefit to GOPAC than an incidental benefit to GOPAC, Mr. Supreme Court stated in Better Business Bu- and Republican entities and candidates in Gingrich, or other Republican entities and reau v. United States, 326 U.S. 276, 283 (1945), violation of the private benefit prohibition. candidates in violation of the private benefit ‘‘the presence of a single noneducational pur- prohibition in section 501(c)(3); b. Campaign intervention prohibition pose, if substantial in nature, will destroy 3. whether the activities with respect to As with respect to the private benefit pro- the exemption regardless of the number or the television programs or the course prohibition, the legal authorities discussed importance of truly educational purposes.’’ vided support to GOPAC or a candidate for above make it clear, according to Ms. Roady, In making such a determination, the Tax public office in violation of the campaign that the analysis of whether there is a viola- Court has held that the proper focus is ‘‘the intervention prohibition in section 501(c)(3); tion of the campaign intervention prohibi- purpose towards which an organization’s ac- 4. whether the activities with respect to tion does not turn on whether the television tivities are directed and not the nature of the television programs or the course vio- programs had a legitimate educational pur- the activities themselves.’’ American Cam- lated the private inurement prohibition in pose. In the IRS CPE Manual, the IRS ex- paign Academy, 92 T.C. at 1078–79. The deter- section 501(c)(3); and plained that ‘‘activities that meet the [edu- mination as to whether there is a violation 5. whether the activities with respect to cational] methodology test * * * may never- of the private benefit prohibition cannot, the television programs or the course vio- theless constitute participation or interven- therefore, be made solely by reference to the lated the lobbying limitations applicable to tion in a political campaign.’’ IRS CPE Man- content of the television programs or wheth- section 501(c)(3) organizations. ual at 415. See also New York Bar, 858 F.2d er the activities in relation to the programs 876 (2d Cir. 1988); Rev. Proc. 86–43. Nor does 72 (11/15/96 Roady Tr. 7). served an educational purpose. Rather, the the analysis turn on the fact that the tele- determination requires a factual analysis to vision programs did not expressly urge view- 71 The one known public comment on the matter determine whether the organization’s activi- ers to ‘‘support GOPAC,’’ ‘‘vote Republican,’’ by Ms. Roady is found in the following paragraph ties also had another, nonexempt purpose to or ‘‘vote for Mr. Gingrich.’’ The IRS does not from a New York Times article: ‘‘Clearly, it’s an ag- provide more than an incidental benefit to a follow the express advocacy standard applied gressive position,’’ said Celia Roady, a Washington private party such as GOPAC or Republican lawyer and chairwoman of the American Bar Asso- by the FEC, and it is not necessary to advo- ciation’s committee on tax-exempt organizations, entities and candidates. In this case, there is cate the election or defeat of a clearly iden- who stressed that she was not talking for the asso- substantial evidence that these parties were tified candidate to violate the campaign ciation. ‘‘Whether it’s too aggressive and crosses the intended to and did receive more than an in- intervention prohibition. IRS CPE Manual at line, I don’t know. Clearly, it’s more aggressive than cidental benefit from the activities con- 413. The determination as to whether there is many exempt organizations would go forward with.’’ ducted by ALOF. a violation of the campaign intervention New York Times, section A, page 12 (Feb. 20, 1995). In summary, according to Ms. Roady, the prohibition requires an overall ‘‘facts and (Ex. 144). In the same article, Mr. Gingrich is quoted evidence shows that the ACTV project was a as saying that he acted aggressively in regard to circumstances’’ analysis that cannot be 501(c)(3) law: ‘‘Whoa,’’ [Mr. Gingrich] said, when made solely by reference to the content of asked after class one recent Saturday if the course 73 After Ms. Roady met with the Subcommittee to the television programs. nears the edge of what the law allows. ‘‘Goes right discuss the tax-exempt organizations law and her The central issue is whether the television up to the edge. What’s the beef? Doesn’t go over the conclusions regarding Renewing American Civiliza- programs provided support to GOPAC. When edge, doesn’t break any law, isn’t wrong. It’s aggres- tion, she met with the Special Counsel to discuss the Congress enacted section 527 in 1974, the leg- sive, it’s entrepreneurial, it’s risk taking.’’ ACTV project. Although she did not formally islative history explained that the provision New York Times, section A, page 12, column 1 present her conclusions to the Subcommittee, the was not intended to affect the prohibition (Feb. 20, 1995). legal principles she explained during her meetings 72 A detailed discussion of the law pertaining to or- with the Subcommittee with respect to Renewing against electioneering activity contained in ganizations exempt from federal income tax under American Civilization were equally applicable to the section 501(c)(3). The IRS regulations under section 501(c)(3) of the Internal Revenue Code is at- facts surrounding the ACTV project and support her section 527 provide that section 501(c)(3) or- tached as an Appendix to this Report. conclusions set forth in this section of the Report. ganizations are not permitted to establish or H216 CONGRESSIONAL RECORD — HOUSE January 21, 1997 support a PAC. Treas. Reg. § 1.527–6(g). Under Democratic party with the ‘‘welfare state.’’ half of KSCF, PFF and Reinhardt in regard the applicable legal standards, there is a vio- (11/15/96 Roady Tr. 128, 130, 142, 145–148, 217– to the course entitled ‘‘Renewing American lation of the campaign intervention prohibi- 218; 11/19/96 Roady Tr. 35, 41). Civilization’’ and the activities of others on tion with respect to ALOF if the evidence The movement, the message of the move- behalf of those organizations with Mr. Ging- shows that the ACTV project provided sup- ment, and the course were all called ‘‘Renew- rich’s knowledge and approval was to provide port to GOPAC, even though the television ing American Civilization.’’ Mr. Gingrich’s more than an incidental benefit to Mr. Ging- programs were educational and were not lectures in the course were based on the rich, GOPAC, and other Republican entities used as a means to expressly advocate the same principles as the message of the move- and candidates in violation of the private election or defeat of a particular candidate. ment, and the course was an important vehi- benefit prohibition. (11/15/96 Roady Tr. 122, According to Ms. Roady, there is substan- cle for disseminating the message of the 125, 127, 143–145, 148, 152, 153, 187–189, 213–217). tial evidence of such support in this case. As movement. Mr. Gingrich stated that the b. Campaign intervention prohibition discussed above, the evidence shows that the course was ‘‘clearly the primary and domi- As discussed above, neither the fact that ACTV project conducted by ALOF was a con- nant method [of disseminating the message the content of the Renewing American Civ- tinuation of AOW, a partisan, political of the movement.]’’ Mr. Gingrich used the ilization course is educational within the project undertaken by GOPAC. Mr. Gingrich Renewing American Civilization message in meaning of section 501(c)(3) nor the fact that himself described ACTV as a continuation of almost every political and campaign speech the course lectures do not contain expres- the AOW project. The activities conducted he made in 1993 and 1994. He was instrumen- sions of support or opposition for a particu- by ALOF with respect to the ACTV project tal in determining that virtually the entire lar candidate precludes a finding that there were the same as the activities that had been political program for GOPAC for 1993 and is a violation of the campaign intervention conducted by GOPAC with respect to the 1994 would be centered on developing, dis- prohibition. Section 501(c)(3) organizations AOW project. The persons who conducted the seminating, and using the message of Renew- are prohibited from establishing or support- ACTV project on behalf of ALOF were ing American Civilization. (11/15/96 Roady Tr. ing PACs, and from providing support to can- GOPAC officers, employees, or consultants. 125–127, 144–145, 148–149, 153, 177, 218). didates in their campaign activities. The rel- Although GOPAC’s financial resources Shifting the project to ALOF allowed the evant issue is whether the course provided were not sufficient to enable it to carry out parties to raise some tax-deductible chari- support to GOPAC or to Mr. Gingrich in his all of the political programs at its usual table contributions to conduct what amount- capacity as a candidate. ed to the continuation of a GOPAC project level during this period, it had many roles in According to Ms. Roady, there is substan- for partisan, political purposes. For these regard to the course. These roles included de- tial evidence of such support in this case. As reasons, Ms. Roady concluded that Mr. Ging- velopment of the course content which was discussed above, the evidence shows that the rich’s activities on behalf of ALOF and the coordinated in advance with GOPAC charter course was developed by Mr. Gingrich as a activities of others on behalf of ALOF with members, fundraising for the course on be- part of a broader political movement to Mr. Gingrich’s knowledge and approval pro- half of the section 501(c)(3) organizations, renew American civilization by replacing the vided support to GOPAC in violation of the and promotion of the course. GOPAC envi- welfare state with an opportunity society. campaign intervention prohibition. sioned a partisan, political role for the The course was an important vehicle for discourse. (11/15/96 Roady Tr. 197–202, 208–209). seminating the message of that movement. 2. THE RENEWING AMERICAN CIVILIZATION From 1993 to 1995, KSCF and PFF spent COURSE The message of replacing the welfare state most of the money they had raised for the with the opportunity society was also used a. Private benefit prohibition course on the dissemination of the 20 hours in a partisan, political fashion. The ‘‘welfare The determination of whether there is a taught by Mr. Gingrich. These funds were state’’ was associated with Democrats and violation of the private benefit prohibition raised primarily through tax-deductible the ‘‘opportunity society’’ was associated does not depend on whether the teaching and charitable contributions to KSCF and to with Republicans. The message of the course dissemination of the course served an edu- PFF,74 funding that would not have been was also the main message of GOPAC during cational purpose, and cannot be made simply available had the project been conducted by 1993 and 1994 and the main message of vir- by analyzing the content of Mr. Gingrich’s GOPAC or another political or noncharitable tually every political and campaign speech lectures. The course met the definition of organization. made by Mr. Gingrich in 1993 and 1994. According to Ms. Roady, the facts as set ‘‘educational’’ under section 501(c)(3) and Through the use of section 501(c)(3) organiza- forth above show that, although the Renew- served an educational purpose. (11/15/96 tions, Mr. Gingrich and others acting with ing American Civilization course served an Roady Tr. 7). Nevertheless, there is a viola- his knowledge and approval raised tax-de- educational purpose, it had another purpose tion of section 501(c)(3) if another purpose of ductible charitable contributions which were as well. (11/19/96 Roady Tr. 37, 40). The other the course was to provide more than an inci- used to support a course designed, developed purpose was to provide a means for develop- dental private benefit. (11/15/96 Roady Tr. 17). and disseminated in a manner that provided ing and disseminating the message of Renew- Making this determination requires an anal- support to GOPAC in its political programs ing American Civilization by replacing the ysis of the facts to find out whether Mr. and to Mr. Gingrich in his re-election cam- welfare state with an opportunity society. Gingrich’s activities on behalf of KSCF, paign. For these reasons, Ms. Roady con- That was the main message of GOPAC and PFF, and Reinhardt and the activities of cluded that Mr. Gingrich’s activities on be- the main message of virtually every political others with his knowledge and approval had half of KSCF, PFF and Reinhardt and the ac- and campaign speech made by Mr. Gingrich another nonexempt purpose to provide more tivities of others on behalf of those organiza- in 1993 and 1994. Through the efforts of Mr. than an incidental benefit to private parties tions with Mr. Gingrich’s knowledge and ap- Gingrich and others acting with his knowl- such as Mr. Gingrich, GOPAC, and other Re- proval provided support to GOPAC and to edge and approval, tax-deductible charitable publican entities and candidates. In this Mr. Gingrich in violation of the campaign contributions were raised to support the dis- case, there is substantial evidence that these intervention prohibition. (11/15/96 Roady Tr. semination of a course in furtherance of Mr. parties were intended to and did receive 171–175, 194). more than an incidental benefit from the ac- Gingrich’s political strategies. (11/19/96 D. Advice Ms. Roady Would Have Given tivities conducted with respect to the course. Roady Tr. 37, 38). Mr. Gingrich encouraged (11/15/96 Roady Tr. 78, 123, 124, 130, 131, 142– GOPAC, House Republicans and other Repub- Had Mr. Gingrich or others associated with 145, 173, 195). lican entities and candidates to use the ACTV or Renewing American Civilization In summary, according to Ms. Roady, the course in their political strategies as well. consulted with Ms. Roady prior to conduct- evidence shows that the course was devel- (11/15/96 Roady Tr. 145, 152, 173). ing these activities under the sponsorship of oped by Mr. Gingrich in the context of a The partisan, political benefit to these par- 501(c)(3) organizations, she would have ad- broader movement. (11/15/96 Roady Tr. 127– ties was intended from the outset, and this vised that they not do so for the reasons set 130, 134–135, 196). This movement was in- benefit cannot be considered merely inciden- forth above. During her testimony before the tended to have political consequences that tal. To the contrary, the evidence supports a Subcommittee, she was asked what her ad- would benefit Mr. Gingrich in his re-election finding that one of Mr. Gingrich’s main pur- vice would have been to Mr. Gingrich and efforts, GOPAC in its national political ef- poses for teaching the course was to develop others associated with ACTV and Renewing forts, and Republican party entities and can- and disseminate the ideas, language, and American Civilization. She said that she didates in seeking to attain a Republican concepts of Renewing American Civilization would have recommended the use of a majority. The goals of the movement were as an integral part of a broad movement in- 501(c)(4) organization to pay for the dissemi- expressed in various ways, and included tended to have political consequences that nation of the course, as long as the dissemi- arousing 200,000 activists interested in re- would benefit him in his re-election efforts, nation was not the primary activity of the newing American civilization by replacing GOPAC in its political efforts, and other Re- 501(c)(4) organization. If this had been done, the welfare state with an opportunity soci- publican entities and candidates in seeking contributions for ACTV and the course ety and having the Republican party adopt to attain a Republican majority. For these would not have been tax-deductible. (11/15/96 the message of Renewing American Civiliza- reasons, Ms. Roady concluded that one of the Roady Tr. 207–208). tion so as to attract those activists to the purposes of Mr. Gingrich’s activities on be- VII. SUMMARY OF CONCLUSIONS OF MR. party. It was intended that a Republican ma- GINGRICH’S TAX COUNSEL A. Introduction jority would be part of the movement, and 74 Some funding came from the sale of videotapes that the Republican party would be identi- and audiotapes of the course. (7/12/96 Eisenach Tr. During the Preliminary Inquiry, Mr. Ging- fied with the ‘‘opportunity society’’ and the 283). rich’s lawyer forwarded to the Subcommittee January 21, 1997 CONGRESSIONAL RECORD — HOUSE H217 a legal opinion letter and follow-on letter re- respect to exempt organizations law. (12/12/96 zations or persons beyond the students them- garding the tax questions at issue. The let- Holden Tr. 26). selves. ters were prepared by attorney James P. When Mr. Baran asked Mr. Holden to pre- (9/6/96 Holden Ltr. 58). During his testimony Holden. At Mr. Gingrich’s request, Mr. Hold- pare his opinion letter, Mr. Baran did not before the Subcommittee, Mr. Holden said en and his partner who helped him prepare ask what qualifications Mr. Holden had in that because the course was educational the letters, Susan Serling, met with the Sub- the exempt organizations area. (12/12/96 Hold- within the meaning of the ‘‘methodology committee on December 12, 1996, to discuss en Tr. 32). Mr. Holden did not give Mr. Baran test’’ referred to above, he could not ‘‘con- his conclusions. The purpose of the letters any information regarding his background in ceive’’ of how the broad dissemination of its was to express Mr. Holden’s conclusions re- exempt organizations law other than the message could violate 501(c)(3). (12/12/96 Hold- garding whether any violation of section names of two references. (12/12/96 Holden Tr. en Tr. 71). 501(c)(3) occurred with respect to the Renew- 33). ing American Civilization course. Mr. Holden’s partner who helped prepared Now, when we get into the course—and I His understanding of the facts of the mat- the opinion, Susan Serling, does not have exam saying I am going to look at the activi- ter was based on a review of the course book perience in the exempt organizations field ties, and if I have a clean educational mes- prepared for the course, videotapes of the other than with respect to the one case re- sage, then my organization is entitled to discourse, documents produced by KSC pursu- ferred to above that is still before the IRS. seminate that message as broadly as we have ant the Georgia Opens Records Act, PFF’s (12/12/96 Holden Tr. 27). She is not a member the resources to do [for any purpose as long application to the IRS for exemption, news- of the ABA Exempt Organizations Commit- as it is] serving the public with that in the paper articles, discussions with Mr. Baran, tee and does not have any publications in the sense that this message has utility to the Mr. Eisenach, and counsel to PFF and exempt organizations field. She has never public. KSCF.75 given any speeches pertaining to exempt or- (12/12/96 Holden Tr. 113–114). In coming to his B. Qualifications of Mr. Gingrich’s Tax Counsel ganizations law and has never testified as an conclusion that the course did not violate Mr. Holden is a partner at the Washington, expert witness with respect to exempt orga- the private benefit prohibition, Mr. Holden D.C. law firm of Steptoe and Johnson. He nizations law. (12/12/96 Holden Tr. 27). made several findings of fact and several as- was an adjunct professor at Georgetown Uni- C. Summary of Conclusions of Mr. Gingrich’s sumptions. For example, he wrote that he versity Law Center from 1970 to 1983. He is Tax Counsel considered the facts that established a close connection between individuals who were ac- co-author of ‘‘Ethical Problems in Federal As set forth in Mr. Holden’s opinion letter, tive in GOPAC and the development and pro- Tax Practice’’ and ‘‘Standards of Tax Prac- his follow-on letter, and in his testimony, it motion of the course. As he characterized it, tice.’’ He is the author of numerous tax pub- was Mr. Holden’s opinion, based on his re- GOPAC’s former Executive Director and lications and a speaker at numerous tax in- view of the facts available to him, that GOPAC employees became employees or constitutes. He was chair of the American Bar ‘‘there would be no violation of section tractors to the organizations that conducted Association Section of Taxation from 1989 to 501(c)(3) if an organization described in that the course. Individuals, foundations, and cor- 1990; chair of the Advisory Group to the Com- section were to conduct ‘Renewing American porations that provided financial support for missioner of Internal Revenue from 1992 to Civilization’ as its primary activity.’’ (9/6/96 the course were also contributors to GOPAC 1993; and chair of the IRS Commissioner’s Holden Ltr. 4). In arriving at this opinion, or Mr. Gingrich’s political campaigns. Review Panel on Integrity Controls from 1989 Mr. Holden evaluated the facts in light of the GOPAC employees solicited contributions to 1990. He was a trustee and president of the requirements: American Tax Policy Institute from 1993 to for the course. (9/6/96 Holden Ltr. 4). Further- 1995 and a regent of the American College of 1. that a section 501(c)(3) organization be more, documents he reviewed: operated exclusively for an exempt purpose; Tax Counsel. He is or was a member of the provide[d] evidence that the course was de- 2. that the organization serve a public following organizations: American Law In- veloped in a political atmosphere and as part rather than a private interest; stitute (consultant, Federal Income Tax of a larger political strategy. The documents 3. that the earnings of an organization not Project); Advisory Group to Senate Finance indicate that Mr. Gingrich and GOPAC inure to the benefit of any person; Committee Staff regarding Subchapter C re- evolved a political theme that they denomi- 4. that no substantial part of the activities visions (1984–1985); Board of Advisors, New nated ‘‘Renewing American Civilization’’ and of the organization consist of attempting to York University/Internal Revenue Service that, in their political campaign capacities, influence legislation; and Continuing Professional Education Program they intended to press this theme to the ad- 5. that the organization not participate or (1987–1990); and BNA Tax Management Advi- vantage of Republican candidates. sory Board. He received a J.D. degree from intervene in any political campaign in support of or in opposition to any candidate for (9/17/96 Holden Ltr. 2). Mr. Holden assumed a Georgetown University Law Center in 1960 political motivation behind the development and a B.S. degree from the University of Col- public office. (9/6/96 Holden Ltr. 4). A discussion of Mr. of the course. As described in his opinion let- orado in 1953. ter: His experience in 501(c)(3) law stems prin- Holden’s views on the two principal tax ques- cipally from one client and one case that has tions at issue before the Subcommittee—the [T]he individuals who controlled GOPAC been before the IRS for the past six years. private benefit prohibition and campaign and who participated in promoting the (12/12/96 Holden Tr. 21).76 He said during his intervention prohibition—is set forth below. course viewed the course as desirable in a political context, and many of their expres- testimony, ‘‘I don’t pretend today to be a 1. PRIVATE BENEFIT PROHIBITION sions and comments evidence a political mo- specialist in exempt organizations. * * * I With respect to whether Renewing Amer- tive and interest. * * * Mr. Gingrich is a pretend to be an expert in the political as- ican Civilization violated the private benefit skilled politician whose ideology finds expects of such organizations.’’ (12/12/96 Holden prohibition described above, Mr. Holden’s pression in a political message, and he is in- Tr. 21). The one case Mr. Holden worked on opinion and follow-on letter focused exclu- terested in maximum exposure of that mes- has not been resolved and he has spent, on sively on the American Campaign Academy sage and in generating interest in those who average, about 30 percent of his time for the case. His letters did not refer to other prece- might be expected to become advocates of last six years on this case. (12/12/96 Holden dent or IRS statements pertaining to the pri- the message. In sum, we have not assumed Tr. 24). He has never been a member of any vate benefit prohibition. In evaluating that the development and promotion of the organization or committee concerned prin- whether Renewing American Civilization course were free from political motivation. cipally with tax-exempt organizations law. created any discernible secondary benefit, in (12/12/96 Holden Tr. 25). He does not have any the terms used by the Court in American (9/6/96 Holden Ltr. 4–5). Furthermore, Mr. publications in the exempt organizations Campaign Academy, Mr. Holden considered Holden said that when preparing his opinion, field. (12/12/96 Holden Tr. 25). He has never whether the course provided an ‘‘identifiable he made the ‘‘critical assumption that the given any speeches on exempt organizations benefit’’ to GOPAC or the Republican party. interests of the political persona surround- law nor has he been an expert witness with He concluded that it did not. ing GOPAC were advanced by creating this Following our review of the course mate- course.’’ (12/12/96 Holden Tr. 72). In this re- 75 Mr. Holden and his partner conferred with Mr. rials, the course syllabi, and video tapes of gard, Mr. Holden also said during his testi- Eisenach for about three hours. (12/12/96 Holden Tr. the course lectures, we have not been able to mony: 38). The conversation with KSCF counsel, via tele- identify any situation in which students of We have taken as an assumption that the phone, lasted about 30 minutes. (12/12/96 Holden Tr. the course were advised to vote Republican, intent [of the course] was to benefit the po- 39). The conversation with PFF’s counsel lasted join the Republican party, join GOPAC, or litical message. If someone told me that about two hours. (12/12/96 Holden Tr. 38–39). Mr. Holden did not talk to Mr. Gingrich prior to writing support Republicans in general. Rather, the teaching the course actually resulted in the the opinion. (12/12/96 Holden Tr. 43). He also did not course explored broad aspects of American benefit, I guess I wouldn’t be surprised be- talk to anyone else involved in the course, such as civilization through Mr. Gingrich’s admit- cause that was our understanding of the ob- Mr. Hanser, Ms. Rogers, Ms. Nelson, Mr. Mescon, or tedly partisan viewpoint. jective. * * * I accept[ed] for purposes of our Ms. Minnix. (12/12/96 Holden Tr. 43–44). (9/17/96 Holden Ltr. 5). Mr. Holden also wrote: opinion that there was an intent to advance 76 Although Mr. Holden declined to identify the cli- the political message by utilizing a (c)(3). ent in this case, he said that the case ‘‘is perhaps From our review of the course materials the largest case the Internal Revenue Service has ** * and their presentation, it appears to us (12/12/96 Holden Tr. 83). In Mr. Holden’s opin- before it on this whole issue.’’ (12/12/96 Holden Tr. 20– that the educational message was not nar- ion, however, the political motivation or 21). rowly targeted to benefit particular organi- strategy behind the creation of the course is H218 CONGRESSIONAL RECORD — HOUSE January 21, 1997 irrelevant when determining whether a vio- It’s an activities test. And this is where D. Advice Mr. Holden Would Have Given lation of the private benefit prohibition oc- the courts say this is the sole issue. The stuff During his appearance before the Sub- curred. before, they’re just kind of reciting the law. committee, Mr. Holden was asked about It is not the presence of politicians or po- When he gets to this, he said this is what we what type of organization he would have ad- litical ideas that controls. The pertinent law have to determine. vised Mr. Gingrich and others to use in order does not turn on the political affiliations or Mr. Cole: But in reciting the law, don’t to conduct and disseminate Renewing Amer- political motivations of the principal par- they say, in testing compliance with the ican Civilization had he been asked in ad- ticipants. operational test, we look beyond the four vance. He said that he would not have ad- (9/6/96 Holden Ltr. 6). According to Mr. Hold- corners of the organization’s charter to dis- vised the use of a 501(c)(3) organization been, the issue of whether a violation of cover the actual objects motivating the or- cause the mix of politics and tax-deductible 501(c)(3) occurred ‘‘may not be resolved by a ganization? Prior to that, they say the oper- funds is too ‘‘explosive.’’ determination that the individuals who de- ational test examines the actual purpose for I would have advised them not to do the signed and promoted the course acted with the organization’s activities, not the nature activity through a (c)(3). I have already ex- political motivation.’’ (9/17/96 Holden Ltr. 4). of the activities or the organization’s state- pressed that view to the Speaker. He didn’t In his opinion, when determining whether an ment of purpose. consult me in advance, but I said, if I had organization violated the private benefit I grant you that is the statement of the been advising you in advance. He said, why prohibition, it is necessary to determine law, but you are saying that has no signifi- not. I said, because the intersection of politi- whether an organization’s activities in fact cance? cal activity and 501(c)(3) is such an explosive served a private interest. (12/12/96 Holden Tr. Mr. Holden: That’s not the case Judge mix in terms of the IRS view of things that 80). What motivates the activities is irrele- Nims decided. * * * I would not advise you to move that close to vant. (12/12/96 Holden Tr. 77). the issue. You should find a way of financing I’m saying it’s irrelevant to look to what 2. CAMPAIGN INTERVENTION PROHIBITION the course that doesn’t involve the use of caused an individual or group of individuals In his opinion letter, Mr. Holden wrote 501(c)(3) funds. That would have been my ad- to form a (c)(3) or to utilize a 501(c)(3) orga- that it was ‘‘important to note that section vice to him. nization. The question instead is on the ac- 501(c)(3) does not, as is often suggested, bar I said, that doesn’t mean I conclude that tivities—the focus instead is on the activi- ‘political activity’ [by 501(c)(3) organiza- what you did is a violation. In fact, I think ties of the organization and whether they tion].’’ (9/6/96 Holden Ltr. 68). The prohibition we are kind of fairly far out beyond the fron- violated the operational test. I think that’s is more limited and prohibits an organiza- tiers of what has been decided in the past in a critical distinction. tion from participating in or intervening in this area. We are looking at the kind of case (12/12/96 Holden Tr. 61). He said that he was any political campaign on behalf of or in op- that I do not think has ever been presented. ‘‘aware of no authority that would hold that position to any candidate for public office. In I do not see how anyone can conclude that because one is motivated to establish a order for an organization to violate this pro- this is an open and shut case. It just is not 501(c)(3) organization by business, political, hibition, there must exist a campaign, a can- of that character. or other motivation, that means that the or- didate, a candidate seeking public office, and (12/12/96 Holden Tr. 132–134). Mr. Holden said ganization cannot operate in a manner that an organization that participates or inter- that an appropriate vehicle for the course satisfies 501(c)(3), because we are talking venes on behalf of or in opposition to that might have been a 501(c)(4) organization be- about an operational test.’’ (12/12/96 Holden candidate. (9/6/96 Holden Ltr. 68–69). Mr. cause such an organization can engage in Tr. 17–18). Mr. Holden cited American Cam- Holden concluded that the course did not some political activity and the activity paign Academy as an authority for his con- violate this prohibition. would not have used tax-deductible funds. clusion that an organization’s activity must The [course] materials contain no endorse- (12/12/96 Holden Tr. 132–134). Later, Mr. Hold- itself benefit a targeted group and that moti- ment of or opposition to the candidacy of en reiterated that he would have not rec- vation of an organization’s agents in con- any person, whether expressed by name or ommended that Renewing American Civiliza- ducting that activity is irrelevant. Mr. Hold- through the use of a label that might be tion be sponsored and funded by a 501(c)(3) organization and pointed out such activities en said: taken as a stand-in for a candidate. While are highly likely to attract the attention of [In American Campaign Academy] [t]he the materials are critical of what is referred the IRS. focus was, instead, on the operational test to as the ‘‘welfare state’’ and laudatory of [T]hose funds are deductible and the con- and whether the activities of the organiza- what is described as an ‘‘opportunity soci- junction of politics and a (c)(3) organization tion evidenced a purpose to serve a private ety,’’ none of this is properly characterized is so explosive as a mix that it is bound to interest. But you have to find that in the ac- as personalized to candidates, directly or in- attract the attention of the Internal Reve- tivities of the organization and not in some directly. nue Service. I wouldn’t have been thinking general notion of motivation or background (9/6/96 Holden Ltr. 72). During his testimony purpose. about this committee. I would have been before the Subcommittee, Mr. Holden said thinking about whether the Internal Reve- (12/12/96 Holden Tr. 61). In light of these and that the course contained issue advocacy in nue Service would have been likely to chal- similar comments made by Mr. Holden, the the sense that it called for the replacement lenge. Special Counsel asked Mr. Holden to com- of the welfare state with the opportunity so- (12/12/96 Holden Tr. 146). After Mr. Holden ment on statements found in the American ciety. (12/12/96 Holden Tr. 103–104). He also made this comment, the following exchange Campaign Academy case at page 1064. The said that this issue—the replacement of the occurred: statements are in a section of the case under welfare state with an opportunity society— Ms. Pelosi: So it would have raised the heading ‘‘Operational Test’’ and are as was closely identified with Mr. Gingrich and questions[?] follows: his political campaigns. (12/12/96 Holden Tr. Mr. Holden: Yes. The operational test examines the actual 104). He, however, did not see this as a basis Mr. Goss: Isn’t that a little bit akin to hav- purpose for the organization’s activities and for concluding that the course violated the ing a yacht and an airplane on your tax re- not the nature of the activities or the organi- prohibition on intervention in a political turn for business purposes[?] zation’s statement of purpose. (citations campaign because ‘‘Mr. Gingrich [had not] Mr. Holden: It is one of those things that omitted). (emphasis supplied). captured [this issue] to the point where it is stands out. In testing compliance with the operational not a legitimate public interest issue for dis- test, we look beyond the four corners of the cussion in a purely educational setting, even (12/12/96 Holden Tr. 146–147). organization’s charter to discover ‘‘the ac- where he is the instructor.’’ (12/12/96 Holden VIII. SUMMARY OF FACTS PERTAINING TO tual objects motivating the organization and Tr. 104).77 STATEMENTS MADE TO THE COMMITTEE the subsequent conduct of the organization.’’ A. Background (citations omitted). (emphasis supplied). 77 See also 12/12/96 Holden Tr. 103: On or about September 7, 1994, Ben Jones, What an organization’s purposes are and Mr. Schiff: But if you are providing 501(c)(3) raised Mr. Gingrich’s Democratic opponent in 1994, what purposes its activities support are money to pay for that candidate to give the same filed with the Committee a complaint questions of fact. (citations omitted). message, which is his political message, I think, for against Mr. Gingrich. The complaint cen- (12/12/96 Holden Tr. 75–76). After the Special all substantial purposes, aren’t you then, in effect, tered on the course. Among other things, it Counsel brought these sections of the case to intervening or even endorsing the candidate by alleged that Mr. Gingrich had used his con- using that type of money to allow him to get his Mr. Holden’s attention, the following ex- message further than it would get in the absence of gressional staff to work on the course and change occurred: that money? that he had misused organizations that were Mr. Holden: May I refer you to the last Mr. Holden: I go back to the fact that we have a exempt from taxation under section 501(c)(3) sentence before the next heading, ‘‘Operating clean curriculum that we were talking about in a of the Internal Revenue Code because the Primarily for Exempt Purposes.’’ The last hypothetical and in the judgment that we reached course was a partisan, political project, with sentence before that says: ‘‘The sole issue for about this case, and I don’t believe that merely be- significant involvement by GOPAC, and was declaration [sic] is whether respondent prop- cause a political figure takes a particular set of val- not a permissible activity for a section ues and articulates them as a political theme, that 501(c)(3) organization. (Ex. 135). erly determined that petitioner failed to sat- that so captures that set of values that a 501(c)(3) or- isfy the first condition of the operational ganization cannot legitimately educate people about test by not primarily engaging in activities, that same set of values. Mr. Holden: It doesn’t seem to me that that com- which is not for exempt purposes.’’ Mr. Schiff: With the same messenger? pels a conclusion that there’s a violation of 501(c)(3). January 21, 1997 CONGRESSIONAL RECORD — HOUSE H219 On or about October 4, 1994, Mr. Gingrich American Civilization’’ organizers went out Subcommittee all documents that were used wrote the Committee in response to the com- of their way to avoid even the appearances of or relied upon to prepare the letters at plaint and primarily addressed the issues improper association with GOPAC. Before we issue—the letters dated October 4, 1994, De- concerning the use of congressional staff for had raised the first dollar or sent out the cember 8, 1994 and March 27, 1995. Mr. Ging- the course. In doing so he stated: first brochure, Course Project Director Jeff rich responded to the Committee’s request I would like to make it abundantly clear Eisenach resigned his position at GOPAC. on October 31, 1996. (Ex. 141). In his response, that those who were paid for course prepara- (Ex. 138, p. 4). Mr. Gingrich described how extremely busy tion were paid by either the Kennesaw State The goal of the letter was to have the he was at the time the October 4, 1994, and Foundation, [sic] the Progress and Freedom complaint dismissed. (11/13/96 Gingrich December 8, 1994 letters were prepared. He Foundation or GOPAC. * * * Those persons said, the October 4, 1994 letter was written paid by one of the aforementioned groups in- Tr. 36). ‘‘in [the] context of exhaustion and focused clude: Dr. Jeffrey Eisenach, Mike DuGally, 2. MARCH 27, 1995 LETTER OF MR. GINGRICH’S effort’’ on finishing a congressional session, Jana Rogers, Patty Stechschultez [sic], Pam- ATTORNEY TO THE COMMITTEE traveling to over a hundred congressional ela Prochnow, Dr. Steve Hanser, Joe Gaylord On January 26, 1995, Representative Bonior districts, tending to his duties as Whip, and and Nancy Desmond. filed with the Committee an amended ver- running for re-election in his district. (Ex. (Ex. 136, p. 2). After the Committee received sion of the Ben Jones complaint against Mr. 141, p. 1). At the time of the December 8, 1994 and reviewed Mr. Gingrich’s October 4, 1994 Gingrich. (Ex. 139). Among other things, the letter, he said that he and his staff were letter, it sent him a letter dated October 31, complaint re-alleged that the Renewing ‘‘making literally hundreds of decisions’’ as 1994, asking for additional information con- American Civilization course had partisan, part of the transition in the House from cerning the allegations of misuse of tax-ex- political purposes and was in violation of Democratic to Republican Control. (Ex. 141, empt organizations in regard to the course. section 501(c)(3). The complaint also alleged p. 2; 11/13/96 Gingrich Tr. 6, 10, 26). With re- The Committee also asked for information substantial involvement of GOPAC in the spect to his level of activity at the time the relating to the involvement of GOPAC in course. (Ex. 139, pp. 1–7). In a letter dated March 27, 1995 letter was created Mr. Ging- various aspects of the course. As set forth in March 27, 1995, Mr. Baran, Mr. Gingrich’s at- rich said the following: the letter, the Committee wrote: torney and a partner at the law firm of [W]e were going through passing the Con- There is, however, an allegation which re- Wiley, Rein and Fielding, filed a response on tract with America in a record 100 days in quires explanation before the Committee can behalf of Mr. Gingrich to the amended com- what many people believe was a forced finalize its evaluation of the complaint. This plaint. (Ex. 140, PFF 4347). Prior to the letter march. I was, in parallel, beginning to lay is the allegation that, in seeking and obtain- being delivered, Mr. Gingrich reviewed it and out the base for the balanced budget by 2002, ing funding for your course on Renewing approved its submission to the Committee. and I was, frankly, being too noisy publicly American Civilization, you improperly used (7/18/96 Gingrich Tr. 274–275). and damaging myself in the process. tax-exempt foundations to obtain taxpayer Mr. Cole: If there was anything inaccurate I had three projects—four; I was writing a subsidization of political activity. in the letter, would you have told Mr. Baran book. So those four projects were ongoing as * * * * * to change it? I was going home to report to my district, Your answers to [questions set forth in the Mr. Gingrich: Absolutely. and we were being battered as part of this letter] would be helpful to the Committee in (7/18/96 Gingrich Tr. 275). continuum by Bonior and others, and we wanted it handled in a professional, calm deciding what formal action to take with re- The letter contains the following state- manner. We wanted to honor the Ethics spect to the complaint. ments, which Mr. Gingrich has admitted process. * * * * * were inaccurate, incomplete, and unreliable. A number of documents submitted by Ben 1. As Ex. 13 demonstrates, the course solic- (11/13/96 Gingrich Tr. 33–34). Jones, however, raise questions as to wheth- itation * * * materials are completely non- Mr. Gingrich wrote in his October 31, 1996 er the course was in fact exclusively edu- partisan. (Ex. 140, p. 19, fn. 7). response to the Subcommittee that ‘‘al- cational in nature, or instead constituted 2. GOPAC did not become involved in the though [he] did not prepare any of the letters partisan political activity intended to bene- Speaker’s academic affairs because it is a po- in question, in each case [he] reviewed the fit Republican candidates. litical organization whose interests are not documents for accuracy.’’ (Ex. 141, p. 3). Spe- (Ex. 137, pp. 1–2). advanced by this non-partisan educational cifically, with respect to the October 4, 1994 B. Statements Made by Mr. Gingrich to the endeavor. (Ex. 140, p. 35). letter, his assistant, Annette Thompson Committee, Directly or Through Counsel 3. The Renewing American Civilization Meeks, showed him the draft she had created 1. MR. GINGRICH’S DECEMBER 8, 1994 LETTER TO course and GOPAC have never had any rela- and he ‘‘read it, found it accurate to the best THE COMMITTEE tionship, official or otherwise. (Ex. 140, p. 35). of [his] knowledge, and signed it.’’ (Ex. 141, p. In a letter dated December 8, 1994, Mr. 4. As noted previously, GOPAC has had ab- 2). With respect to the December 8, 1994 let- Gingrich responded to the Committee’s Octo- solutely no role in funding, promoting, or ad- ter, he wrote, ‘‘Again I would have read the ber 31, 1994 letter. (Ex. 138). In that letter, ministering Renewing American Civiliza- letter carefully and concluded that it was ac- Mr. Gingrich made the following statements, tion. (Ex. 140, pp. 34–35). curate to the best of my knowledge and then which he has admitted were inaccurate, in- 5. GOPAC has not been involved in course signed it.’’ (Ex. 141, p. 2). With respect to the complete, and unreliable. fundraising and has never contributed any March 27, 1995 letter, he wrote that he ‘‘read 1. [The course] was, by design and applica- money or services to the course. (Ex. 140, p. [it] to ensure that it was consistent with tion, completely non-partisan. It was and re- 28). [his] recollection of events at that time.’’ mains about ideas, not politics. (Ex. 138, p. 6. Anticipating media or political attempts (Ex. 141, p. 3). 2). to link the course to GOPAC, course organiz- D. Creation of the December 8, 1994 and March 2. The idea to teach ‘‘Renewing American ers went out of their way to avoid even the 27, 1995 Letters appearance of associating with GOPAC. Civilization’’ arose wholly independent of Mr. Gingrich appeared before the Sub- Prior to becoming Course Project Director, GOPAC, because the course, unlike the com- committee on November 13, 1996 to testify Jeffrey Eisenach resigned his position at mittee, is non-partisan and apolitical. My about these letters.78 He began his testimony GOPAC and has not returned. (Ex. 140, p. 36). motivation for teaching these ideas arose by stating that the ‘‘ethics process is very not as a politician, but rather as a former ed- The purpose of Mr. Baran’s letter was to important.’’ (11/13/96 Gingrich Tr. 4). He then ucator and concerned American citizen * * *. have the Committee dismiss the complaints went on to state: (Ex. 138, p. 4). against Mr. Gingrich. (11/13/96 Gingrich Tr. 3. The fact is, ‘‘Renewing American Civili- 35–36). On Monday I reviewed the 380-page [July 1996] interview with Mr. Cole, and I just want zation’’ and GOPAC have never had any offi- C. Subcommittee’s Inquiry Into Statements to begin by saying to the [C]ommittee that I cial relationship. (Ex. 138, p. 4). Made to the Committee 4. GOPAC * * * is a political organization am very embarrassed to report that I have On September 26, 1996, the Subcommittee whose interests are not directly advanced by concluded that reasonable people could con- expanded the scope of the Preliminary In- this non-partisan educational endeavor. (Ex. clude, looking at all the data, that the let- quiry to determine: 138, p. 5). ters are not fully responsive, and, in fact, I 5. As a political action committee, GOPAC [w]hether Representative Gingrich provided think do fail to meet the standard of accu- never participated in the administration of accurate, reliable, and complete information rate, reliable and complete. ‘‘Renewing American Civilization.’’ (Ex. 138, concerning the course entitled ‘‘Renewing p. 4). American Civilization,’’ GOPAC’s relation- 78 Mr. Gingrich appeared twice before the Sub- 6. Where employees of GOPAC simulta- ship to the course entitled ‘‘Renewing Amer- committee to discuss these letters. The first time neously assisted the project, they did so as ican Civilization,’’ or the Progress and Free- was on November 13, 1996, in response to a request private, civic-minded individuals contribut- dom Foundation in the course of commu- from the Subcommittee that he appear and testify ing time and effort to a 501(c)(3) organiza- nicating with the Committee, directly or about the matter under oath. The second time was tion. (Ex. 138, p. 4). through counsel * * *. on December 10, 1996, as part of his opportunity to 7. Anticipating media or political attempts On October 1, 1996, the Subcommittee re- address the Subcommittee pursuant to Rule 17(a)(3) of the Committee’s Rules. Pursuant to Committee to link the Course to [GOPAC], ‘‘Renewing quested that Mr. Gingrich produce to the Rules, that appearance was also under oath. H220 CONGRESSIONAL RECORD — HOUSE January 21, 1997 (11/13/96 Gingrich Tr. 5). Mr. Gingrich said not contact GOPAC, Kennesaw State Col- ing to her, and you will have to confirm it several times that it was only on the Mon- lege, or Reinhardt College. (11/13/96 Baran Tr. with her. I tried to not talk to her about day before his testimony—the day when he 13, 15, 18). Mr. Baran did not recall speaking that. reviewed the transcript of his July interview to Mr. Gingrich about the letter other than with Mr. Cole—that he realized the letters possibly over dinner on December 9, 1994— (11/13/96 Baran Tr. 10). Mr. Baran de- were inaccurate, incomplete, and unreliable. one day after the letter was signed by Mr. scribed the process for reviewing the (11/13/96 Gingrich Tr. 5, 8, 10, 149, 150, 195; 12/ Gingrich. (11/13/96 Baran Tr. 18, 33). Mr. letter as follows: 10/96 Gingrich Tr. 75). In his testimony before Baran did contact Mr. Eisenach, but did not Well, you know, as a counsel who was re- the Subcommittee the next month, Mr. recall the ‘‘nature of the contact.’’ (11/13/96 tained relatively late in that process at that Gingrich ‘‘apologized for what was clearly a Baran Tr. 16). Mr. Eisenach said he had no failure to communicate accurately and com- time and as someone who had no firsthand record of ever having spoken to Mr. Baran knowledge about any of the underlying ac- pletely with this [C]ommittee.’’ (12/10/96 about the letter and does not believe that he Gingrich Tr. 5). Mr. Gingrich said the errors tivities and with a marching order of trying did so. (11/14/96 Eisenach Tr. 18–19, 22). The to prepare a draft that was usable by the were a result of ‘‘a failure to communicate conversation he had with Mr. Baran con- involving my legal counsel, my staff and staff, we were pretty much focused on get- cerned matters unrelated to the letter. ting something together and over to Annette me.’’ (11/14/96 Eisenach Tr. 17–18). Mr. Eisenach (12/10/96 Gingrich Tr. 5). Mr. Gingrich went Meeks so that it could be used. Verification also said that no one has ever given him a on to say: was something that would have been avail- copy of the December 8, 1994 letter and asked able through those who had firsthand knowl- After reviewing my testimony, my coun- him to verify its contents. (11/14/96 Eisenach sel’s testimony, and the testimony of two of edge about these facts, who had reviewed the Tr. 22). draft. his associates, the ball appears to have been The other attorney at Wiley, Rein and dropped between my staff and my counsel re- Fielding involved in preparing the response (11/13/96 Baran Tr. 15). Mr. Baran did not, garding the investigation and verification of was Bruce Mehlman. (11/13/96 Baran Tr. 19; 11/ however, know whether the letter was re- the responses submitted to the [C]ommittee. 19/96 Mehlman Tr. 17). He was a first-year as- As I testified, I erroneously, it turns out, viewed by others to determine its accuracy. sociate who had been at Wiley, Rein and relied on others to verify the accuracy of the (11/13/96 Baran Tr. 48). statements and responses. This did not hap- Fielding since September 1994. (11/19/96 83 Ms. Meeks said that at the time the letter pen. As my counsel’s testimony indicates, Mehlman Tr. 5). Mr. Mehlman’s role was to create the first draft. (11/19/96 Mehlman Tr. was being prepared, she had no knowledge of there was no detailed discussion with me re- whether: garding the submissions before they were 15). The materials Mr. Mehlman had avail- 1. the course was a political or partisan ac- sent to the [C]ommittee. Nonetheless, I bear able to him to prepare the draft were: responsibility for them, and I again apolo- 1. correspondence between Mr. Gingrich tivity by design or application; gize to the [C]ommittee for what was an in- and the Committee, including the October 4, 2. GOPAC was involved in the course; advertent and embarrassing breakdown. 1994 letter; 3. GOPAC was benefited by the course; 2. course videotapes; 4. GOPAC created, funded, or administered * * * * * 3. the book used in the course called ‘‘Re- the course; At no time did I intend to mislead the newing American Civilization’’; 5. the idea to teach the course arose wholly [C]ommittee or in any way be less than 4. a course brochure; independent of GOPAC; forthright. 5. the complaint filed by Ben Jones against 6. Mr. Gingrich’s motivation for teaching (12/10/96 Gingrich Tr. 5–7). Of all the people Mr. Gingrich; and the course arose not as a politician but rath- involved in drafting, reviewing, or submit- 6. documents produced pursuant to a Geor- er as a historian; ting the letters, the only person who had gia Open Records Act request. 7. Mr. Eisenach resigned his position at first-hand knowledge of the facts contained GOPAC. within them with respect to the Renewing (11/19/96 Mehlman Tr. 15–16, 20). Mr. Mehlman American Civilization course was Mr. Ging- said that he did not attempt to gather any (11/14/96 Meeks Tr. 45–47). Ms. Meeks also said rich. other documents because he did not see a she was unaware that GOPAC’s theme was need to go beyond these materials in order to 1. CREATION OF THE DECEMBER 8, 1994 LETTER Renewing American Civilization. (11/14/96 prepare a response. (11/19/96 Mehlman Tr. 19– Meeks Tr. 88). According to Mr. Gingrich, after he re- 20). With the exception of contacting his ceived the Committee’s October 31, 1994 let- brother, who had taken the course,84 Mr. Ms. Meeks said she had no role in drafting ter, he decided that the issues in the letter Mehlman did not make any inquiries of peo- the letter, did not talk to anyone to verify were too complex to be handled by his office ple regarding the facts of the matter. (11/19/ that the facts in the letter were accurate, and he sought the assistance of an attorney. 96 Mehlman Tr. 18). He did not, for example, and had no knowledge of how the facts in the (11/13/96 Gingrich Tr. 11). Mr. Gaylord, on be- contact GOPAC or Mr. Eisenach. (11/19/96 letter were checked for accuracy. (11/14/96 half of Mr. Gingrich, contacted Jan Baran Mehlman Tr. 28). After he completed his first and the Mr. Baran’s firm began representing Meeks Tr. 39, 48, 51). She did not indicate to Mr. Gingrich on November 15, 1994. (11/14/96 draft, he gave it to Mr. Baran. (11/19/96 Mr. Baran that she had given the letter to Mehlman Tr. 22). He assumed that Mr. Baran Gaylord Tr. 16; 79 11/13/96 Baran Tr. 4; 80 12/10/ anyone for the purpose of checking its accu- 96 Gingrich Tr. 5). The response prepared by would make sure that any factual questions racy. (11/14/96 Meeks Tr. 87). In this regard, Mr. Baran’s firm became the letter from Mr. would have been answered to his satisfaction Ms. Meeks said: before the letter went out. (11/19/96 Mehlman Gingrich to the Committee dated December I will be very frank and tell you I don’t Tr. 51). However, Mr. Mehlman did not know 8, 1994. know how [Mr. Baran] composed this infor- what, if anything, Mr. Baran did with the According to Mr. Baran, he did not receive mation as far as who he spoke with. I was draft after he gave it to him. (11/19/96 any indication from Mr. Gaylord or Mr. not privy to any of that. The only thing I Mehlman Tr. 22). Gingrich that Mr. Baran was to do any kind could add to my answer is that once counsel When Mr. Gaylord asked Mr. Baran to pre- of factual review in order to prepare the re- is retained, we were kind of out of the pic- 81 pare the letter, it was Mr. Baran’s under- sponse. (11/13/96 Baran Tr. 47–48). Mr. Baran ture as far as the process, other than typing standing that Annette Thompson Meeks, an and his staff did not seek or review docu- and transmitting. ments other than those attached to the com- Administrative Assistant for Mr. Gingrich’s plaint of Mr. Jones and the Committee’s Oc- office, would help. (11/13/96 Baran Tr. 5, 7). (11/14/96 Meeks Tr. 92). She said her role was tober 31, 1994 letter to Mr. Gingrich 82 and did According to Mr. Baran, Ms. Meeks’ role to provide Mr. Baran with: background infor- was: mation about Mr. McCarthy (the Commit- 79 Mr. Gaylord was the one to contact the firm be- basically to take a draft product from us and tee’s counsel who had conferred with Mr. cause his position was ‘‘advisor to Congressman review it for accuracy [from] her personal Gingrich’’ and he coordinated ‘‘all of the activities Gingrich about the course in 1993); a copy of that were outside the official purview of [Mr. Ging- knowledge and basically make sure that it the October 4, 1994 letter from Mr. Gingrich rich’s] congressional responsibilities.’’ (11/14/96 Gay- was acceptable. And in that regard, I be- to the Committee; copies of papers relating lord Tr. 19; 11/13/96 Baran Tr. 7). lieved that she may have spoken with other to Mr. Hanser’s employment with Mr. Ging- 80 Mr. Gingrich waived his attorney/client privilege people to confirm that, but you will be talk- rich’s congressional office; and copies of the and asked Mr. Baran to testify before the Commit- tee. (11/13/96 Gingrich Tr. 5). course videotapes. (11/14/96 Meeks Tr. 36–37). 81 Mr. Gaylord said that he did not give any in- 83 Mr. Mehlman left Wiley, Rein & Fielding in Feb- Mr. Gaylord had a similar expectation in ruary 1996 and is now an attorney with the National structions to Mr. Baran about how the response that, by retaining Wiley, Rein and Fielding, should be prepared. (11/14/96 Gaylord Tr. 16–17). Mr. Republican Congressional Committee. (11/19/96 Baran, however, recalled that Mr. Gaylord said that Mehlman Tr. 5). the firm was: the response should be completed quickly ‘‘because 84 The information obtained from his brother used both protecting us and had done the proper there was hope that the Ethics Committee would as the basis of the statement in Mr. Gingrich’s re- and correct investigation in the preparation meet before the end of the year to consider this mat- sponse that the course contained ‘‘as many ref- of the letters and that they, in fact, did their erences to Franklin Roosevelt, Jimmy Carter, and ter’’ and that it should not be too expensive. (11/13/ job because that’s what they were paid to do. 96 Baran Tr. 7, 46–48). Martin Luther King, Jr. as there are to Ronald 82 The attachments to the October 31, 1994 letter Reagan or Margaret Thatcher.’’ (11/19/96 Mehlman And I presumed that they had extracted the were selected from materials that were part of the Tr. 20). Mr. Mehlman, however, personally reviewed information from Dr. Eisenach and others complaint filed by Mr. Jones. only one course videotape. (11/19/96 Mehlman Tr. 21). who were involved specifically in the course. January 21, 1997 CONGRESSIONAL RECORD — HOUSE H221 (11/14/96 Gaylord Tr. 62). Mr. Gaylord, how- Open Records Act] documents or some of the there were uses of GOPAC resources that ever, did not know what inquiry Mr. Baran course materials that purport to be non- were accounted for by Mr. Eisenach.’’ (11/13/ made in order to prepare the letter. (11/14/96 partisan, or to have created a course that 96 Baran Tr. 21). Mr. Baran could not recall Gaylord Tr. 17). was nonpartisan, that certainly would ex- how he came to this understanding. (11/13/96 After Mr. Baran sent Ms. Meeks a draft of plain design. Baran Tr. 21–22). the letter, Ms. Meeks re-typed the letter and As far as in application, probably the ref- With respect to whether Mr. Baran knew sent the new version to Mr. Baran to verify erence made by my brother who had seen the that GOPAC was involved in raising funds that it was identical to what he had sent her. course, who had participated in it, I suppose, for the course, Mr. Baran said: She then recalled faxing a copy to Mr. Gay- and my general basic review of the initial At that time my recollection of quote, lord and to Mr. Gingrich’s executive assist- writings about the course and viewing the GOPAC being involved in fund-raising [un- ant ‘‘to get Newt to take a look at it.’’ (11/ first videotape of the course, suggested that quote] was focused on Ms. Prochnow, the fi- 14/96 Meeks Tr. 43–44). Mr. Gingrich said the course was nonpartisan. nance director who I don’t know and have about his review of the letter: (11/19/96 Mehlman Tr. 24–25). never met, but whose role was characterized, And I think in my head, I was presented a According to Mr. Baran, the letter to the I believe, by Jeff Eisenach to me at some document—I am not trying to blame any- College Republicans—which was one of the point, as having helped raise a couple of con- body, or I am not trying to avoid this, I am attachments to the September 7, 1994 Jones tributions, I think, Cracker Barrel was one trying to explain how it happened. I was pre- complaint (Ex. 81)—did not raise a question of them, that is a name that sticks in my sented a document and told, this is what we in his mind that the course was partisan or mind. But it was characterized as being sort have collectively decided is an accurate about politics. (11/13/96 Baran Tr. 23). of ancillary and just really not material. statement of fact. I read the document, and 2. ‘‘The idea to teach ‘Renewing American (11/13/96 Baran Tr. 41). it did not at any point leap out to me and Civilization’ arose wholly independent of 3. CREATION OF THE MARCH 27, 1995 LETTER say, boy, you had better modify paragraph 3, GOPAC, because the course, unlike the com- or that this phrase is too strong and too de- mittee, is non-partisan and apolitical. My In addition to the associate, Mr. Mehlman, finitive. I think I read it one time, so that motivation for teaching these ideas arose who had worked with Mr. Baran in drafting seems right to me, and I signed it. not as a politician, but rather as a former ed- Mr. Gingrich’s December 8, 1994 letter to the (11/13/96 Gingrich Tr. 11). See also 11/13/96 ucator and concerned American citizen Committee, another associate, Michael Gingrich Tr. 10 (at the time he read the let- * * *.’’ (Ex. 138, p. 4). Toner, helped Mr. Baran draft what became ter, ‘‘nothing leaped out at [him] and said, Mr. Baran said that the basis of this state- the March 27, 1995 letter.87 (11/19/96 Toner Tr. ‘this is wrong’ ’’) and 11/13/96 Gingrich Tr. 16 ment was a review of the course tapes and 10–11). As with the December 8, 1994 letter, 85 (the letter ‘‘seemed accurate’’ to him). the belief that the course had originated Mr. Baran did not receive any indication Mr. Gaylord did not recall whether he re- from a January 25, 1993 speech Mr. Gingrich from Mr. Gaylord or Mr. Gingrich that Mr. viewed the letter prior to its being sent to had given on the House floor. (11/13/96 Baran Baran was to do any kind of factual review the Committee. (11/14/96 Gaylord Tr. 18). Mr. Tr. 24–25). At the time the letter was drafted, in order to prepare the March 27, 1995 letter. Gaylord said that the statement that GOPAC Mr. Baran was unaware of Mr. Gingrich’s De- (11/13/96 Baran Tr. 48). Mr. Baran did not re- had no role in the administration of the cember 1992 meeting with Owen Roberts call contacting anyone outside the law firm course was incorrect. (11/14/96 Gaylord Tr. 30– where Mr. Gingrich first laid out his ideas for facts relevant to the preparation of the 31). Mr. Gaylord said that the statement that for the Renewing American Civilization letter with respect to the course. He said GOPAC employees contributed time as pri- movement and course. (11/13/96 Baran Tr. 25). that ‘‘the facts about the course, frankly, vate, civic-minded people was incorrect. (11/ Mr. Mehlman did not speak with Mr. Ging- didn’t seem to have changed any from the 14/96 Gaylord Tr. 31). Mr. Gaylord was not rich about his motivations for the course and December period to the March period. And asked to verify the facts in the letters. (11/14/ did not know if Mr. Baran had spoken with our focus seemed to be elsewhere.’’ (11/13/96 96 Gaylord Tr. 20, 33). Mr. Gingrich about his motivations for Baran Tr. 28). Both Mr. Mehlman and Mr. 2. BASES FOR STATEMENTS IN THE DECEMBER 8, teaching the course. (11/19/96 Mehlman Tr. Toner said that they did not contact anyone 1994 LETTER 27). with knowledge of the facts at issue in order During their testimony, those involved in to prepare the letter. (11/19/96 Toner Tr. 21–22, 3. ‘‘The fact is, ‘Renewing American Civili- the creation of the letter were unable to ex- 38; 11/19/96 Mehlman Tr. 38). zation’ and GOPAC have never had any offi- plain the bases for many of the statements Ms. Meeks said that she had no role in the cial relationship.’’ (Ex. 38, p. 4). in the letter. Explanations were, however, preparation of the letter. (11/14/96 Meeks Tr. given for the bases of some of the state- Mr. Baran said about this statement: 50). She saw it for the first time one day ments. A summary of those bases is set forth Well, I think the basis of [this] statement[] prior to her testimony before the Sub- below. [was] essentially the characterizations that committee in November 1996. (11/14/96 Meeks 1. [The course] was, by design and applica- had been placed on the relationship between Tr. 50). Mr. Eisenach said that he did not tion, completely non-partisan. It was and re- the course and GOPAC by people like Jeff have any role in the preparation of the letter 86 mains about ideas, not politics. (Ex. 138, p. Eisenach at that time, and it was consist- nor was he asked to review it prior to its 2). ent with my limited knowledge of GOPAC’s submission to the Committee. (11/14/96 association with the course at that time. . .. Eisenach Tr. 24–25). Mr. Gaylord said that he Mr. Baran said that the basis for this You know, the various materials, some of had no role in the preparation of the letter statement was his review of the course tapes which we went through this morning, were and did not provide any information that is and course materials. (11/13/96 Baran Tr. 19). items that came to my attention in the in the letter. (11/14/96 Gaylord Tr. 20). He also Mr. Mehlman said the following about his course of the document production, which said that he did not discuss the letter with understanding of the basis of this statement: commenced, I think, around April of this Mr. Gingrich or Mr. Baran at the time of its Well, I don’t specifically recall. If I had to year and took quite a bit of time, or that preparation. (11/14/96 Gaylord Tr. 21). Mr. assume, it would be some of the [Georgia came up in the course of your interviews Gaylord said that he did not know where with Mr. Gingrich. Baran obtained the facts for the letter. He 85 In early July 1993, Mr. Gingrich was interviewed * * * * * ‘‘presumed’’ that Mr. Baran and his associ- about the course by a student reporter with the KSC Well, I think the basis is that these state- ates had gathered the facts. (11/14/96 Gaylord newspaper. In that interview the following exchange ments were being reviewed by people who Tr. 21–22). took place: Mr. Baran said that his role in creating the Interviewer: And how is GOPAC involved in this? would presumably be in a position to correct Mr. Gingrich: It’s not involved in this at all. me if there [sic] was wrong. letter was to meet with Mr. Mehlman and Interviewer: Are you going to bring a lot of your (11/13/96 Baran Tr. 36–37). Mr. Toner, review the status of their re- ideas to GOPAC though? When asked about the appearance of search and drafting and review their drafts. Mr. Gingrich: Absolutely. Every single one of GOPAC fax cover sheets on documents per- (11/13/96 Baran Tr. 28). Mr. Mehlman and Mr. them. Toner divided responsibility for drafting por- (Ex. 142, p. 10). taining to the course, Mr. Baran said that such faxes raised questions in his mind but tions of the letter. (11/19/96 Toner Tr. 12–14; In other interviews over the past few years, Mr. 11/19/96 Mehlman Tr. 36, 37, 40). Mr. Baran Gingrich has made other statements about GOPAC’s that he ‘‘had an understanding at that time also made edits to the letter. (11/19/96 involvement in the course. They have included, for that those questions were addressed by an example, the following: explanation that there were either incidental Mehlman Tr. 40). During his interview, Mr. 1.‘‘GOPAC had the most incidental involvement at or inadvertent uses of GOPAC resources or Toner stressed that there were many edits to the very beginning of the process.’’ (Atlanta Con- the letter by Mr. Baran, Mr. Mehlman, and stitution, section A, page 1 (Sept. 19, 1993)). himself and he could, therefore, not explain 2.‘‘GOPAC provided some initial ideas on who 86 Earlier in his testimony and as described above, who had drafted particular sentences in the might be interested in financing the course; that’s Mr. Baran said that he had contacted Mr. Eisenach letter. (see, e.g, 11/19/96 Toner Tr. 34). all they did.’’ (Associated Press, AM cycle, (Sept. 2, at the time the letter was being prepared, but did 1993)). not recall the ‘‘nature of the contact.’’ (11/13/96 3.‘‘The initial work was done before we talked Baran Tr. 16). As also discussed above, Mr. Eisenach 87 Mr. Toner has been an associate attorney with with Kennesaw State College at GOPAC in organiz- recalled having a discussion with Mr. Baran at the Wiley, Rein and Fielding since September 1992, ex- ing our thoughts.’’ (The Hotline, American Political time the letter was being prepared, but about topics cept for a period during which we he worked with Network, Inc. (Sept. 7, 1993)). unrelated to the letter. (11/14/96 Eisenach Tr. 17–18). the Dole/Kemp campaign. (11/19/96 Toner Tr. 6). H222 CONGRESSIONAL RECORD — HOUSE January 21, 1997 After the letter was drafted, Mr. Baran source of funding for the projects and turned ments contained therein. A number of exhib- said that Mr. Baran and his associates then to a 501(c)(3) organization for that purpose. its attached to the complaint were fax trans- ‘‘would have sent a draft that they felt com- Once the projects had been established at the mittal sheets from GOPAC. While this did fortable with over to the Speaker’s office.’’ 501(c)(3) organizations, however, the same not on its face establish anything more than (11/13/96 Baran Tr. 28). Mr. Baran, Mr. Toner, people continued to manage it as had done so GOPAC’s fax machine having been used for and Mr. Mehlman each said during their tes- at GOPAC, the same message was used as the project, it certainly should have put the timony that they assumed that Mr. Gingrich when it was at GOPAC, and the dissemina- attorneys on notice that there was some re- or someone in his office reviewed the letter tion of the message was directed toward the lationship between the course and GOPAC for accuracy before it was submitted to the same goal as when the project was at that should have been examined before say- Committee. (11/19/96 Toner Tr. 16, 40, 44; 11/13/ GOPAC—building the Republican Party. The ing that GOPAC had absolutely no involve- 96 Baran Tr. 32–33, 37–38; Mehlman Tr. 41). only significant difference was that the ac- ment in the course. They, however, did not know whether Mr. tivity was funded by a 501(c)(3) organization. The lawyers said they relied on Mr. Ging- Gingrich or anyone in his office with knowl- This was not a situation where one entity rich and his staff to ensure that the letters edge of the facts at issue ever actually re- develops a message through a course or a tel- were accurate; however, none of Mr. Ging- viewed the letter prior to its submission to evision program for purely educational pur- rich’s staff had sufficient knowledge to be the Committee. (11/19/96 Toner Tr. 17, 40, 44; poses and then an entirely separate entity able to verify the accuracy of the facts. 11/13/96 Baran Tr. 37–38; Mehlman Tr. 41). independently decides to adopt that message While Mr. Gaylord and Mr. Eisenach did have With respect to Mr. Baran’s understanding for partisan, political purposes. Rather, this sufficient knowledge to verify many of the of whether Mr. Gingrich reviewed the letter, was a coordinated effort to have the 501(c)(3) facts, they were not asked to do so. The only the following exchange occurred: organization help in achieving a partisan, person who reviewed the letters for accu- Mr. Cole: Did you have any discussions political goal. In both instances the idea to racy, with sufficient knowledge to verify with Mr. Gingrich concerning this letter develop the message and disseminate it for those facts, was Mr. Gingrich. prior to it going to the committee? partisan, political use came first. The use of The Subcommittee considered the rel- Mr. Baran: I don’t recall any. I just wanted the 501(c)(3) came second as a source of fund- evance of the reference to GOPAC in Mr. to make sure that he did review it before it ing. Gingrich’s first letter to the Committee was submitted. This factual analysis was accepted by all Mr. Cole: How did you determine that he Members of the Subcommittee and the Spe- dated October 4, 1994. In that letter he stated had reviewed it? cial Counsel. However, there was a difference that GOPAC was one of the entities that paid Mr. Baran: I don’t recall today, but I would of opinion as to the result under 501(c)(3) people to work on the course. Some Members not file anything until I had been assured by when applying the law to these facts. Ms. of the Subcommittee believed that this was somebody that he had read it. Roady, the Subcommittee’s tax expert, was evidence of lack of intent to deceive the Mr. Cole: Would that assurance also have of the opinion that the facts presented a Committee on Mr. Gingrich’s part because if involved him reading it and not objecting to clear violation of 501(c)(3) because the evi- he had planned to hide GOPAC’s involve- any of the facts that are asserted in the let- dence showed that the activities were in- ment, he would not have made such an inter? tended to benefit Mr. Gingrich, GOPAC, and consistent statement in the subsequent let- Mr. Baran: I don’t know what his review other Republican candidates and entities. ters. Other Members of the Subcommittee process was regarding this letter. Mr. Holden, Mr. Gingrich’s tax attorney, dis- and the Special Counsel appreciated this agreed. He found that the course was non- point, but believed the first letter was of lit- * * * * * tle value. The statement in that letter was Mr. Cole: If he just read it, you may still partisan in its content, and even though he assumed that the motivation for disseminat- only directed to establishing that Mr. Ging- be awaiting comments from him. Would you rich had not used congressional resources in have made sure that he had read it and ap- ing it involved partisan, political goals, he did not find a sufficiently narrow targeting developing the course. The first letter made proved it, or just the fact that he read it is no attempt to address the tax issues, even all you would have been interested in, trying of the dissemination to conclude that it was a private benefit to anyone. though it was a prominent feature of the to make sure that we don’t blur that distinc- complaint. When the Committee specifically tion? Some Members of the Subcommittee and the Special Counsel agreed with Ms. Roady focused Mr. Gingrich’s attention on that Mr. Baran: No, I would have wanted him to issue and questions concerning GOPAC’s in- be comfortable with this on many levels. and concluded that there was a clear violation of 501(c)(3) with respect to AOW/ACTV volvement in the course, his response was Mr. Cole: And were you satisfied that he not accurate. was comfortable with it prior to filing it and Renewing American Civilization. Other with the committee? Members of the Subcommittee were troubled During his testimony before the Sub- Mr. Baran: Yes. by reaching this conclusion and believed committee, Mr. Gingrich stated that he did Mr. Cole: Do you know how you were satis- that the facts of this case presented a unique not intend to mislead the Committee and fied? situation that had not previously been ad- apologized for his conduct. This statement Mr. Baran: I can’t recall the basis upon dressed by the legal authorities. As such, was a relevant consideration for some Mem- which that happened. they did not feel comfortable supplanting bers of the Subcommittee, but not for oth- (11/13/96 Baran Tr. 32–33). the functions of the Internal Revenue Serv- ers. ice or the Tax Court in rendering a ruling on The Subcommittee concluded that because 4. BASES FOR STATEMENTS IN THE MARCH 27, 1995 what they believed to be an unsettled area of LETTER these inaccurate statements were provided the law. to the Committee, this matter was not re- With respect to the bases for the state- B. Statements Made to the Committee solved as expeditiously as it could have been. ments in the letter in general, Mr. Baran The letters Mr. Gingrich submitted to the This caused a controversy over the matter to said that it was largely based on the Decem- arise and last for a substantial period of ber 8, 1994 letter and any information he and Committee concerning the Renewing Amer- ican Civilization complaint were very trou- time, it disrupted the operations of the his associates relied on to prepare it. (11/13/96 House, and it cost the House a substantial Baran Tr. 37–38). bling to the Subcommittee. They contained definitive statements about facts that went amount of money in order to determine the IX. ANALYSIS AND CONCLUSION to the heart of the issues placed before the facts. A. Tax Issues Committee. In the case of the December 8, C. Statement of Alleged Violation In reviewing the evidence concerning both 1994 letter, it was in response to a direct re- the AOW/ACTV project and the Renewing quest from the Committee for specific infor- Based on the information described above, American Civilization project, certain pat- mation relating to the partisan, political na- the Special Counsel proposed a Statement of terns became apparent. In both instances, ture of the course and GOPAC’s involvement Alleged Violations (‘‘SAV’’) to the Sub- GOPAC had initiated the use of the messages in it. committee on December 12, 1996. The SAV as part of its political program to build a Re- Both letters were efforts by Mr. Gingrich contained three counts: (1) Mr. Gingrich’s ac- publican majority in Congress. In both in- to have the Committee dismiss the com- tivities on behalf of ALOF in regard to AOW/ stances there was an effort to have the mate- plaints without further inquiry. In such situ- ACTV, and the activities of others in that re- rial appear to be non-partisan on its face, yet ations, the Committee does and should place gard with his knowledge and approval, conserve as a partisan, political message for the great reliance on the statements of Mem- stituted a violation of ALOF’s status under purpose of building the Republican Party. bers. section 501(c)(3); (2) Mr. Gingrich’s activities Under the ‘‘methodology test’’ set out by The letters were prepared by Mr. Ging- on behalf of Kennesaw State College Founda- the Internal Revenue Service, both projects rich’s lawyers. After the Subcommittee de- tion, the Progress and Freedom Foundation, qualified as educational. However, they both posed the lawyers, the reasons for the state- and Reinhardt College in regard to the Re- had substantial partisan, political aspects. ments being in the letters was not made any newing American Civilization course, and Both were initiated as political projects and clearer. The lawyers did not conduct any the activities of others in that regard with both were motivated, at least in part, by po- independent factual research. Looking at the his knowledge and approval, constituted a litical goals. information the lawyers used to write the violation of those organizations’ status The other striking similarity is that, in letters, the Subcommittee was unable to find under section 501(c)(3); and (3) Mr. Gingrich both situations, GOPAC was in need of a new any factual basis for the inaccurate state- had provided information to the Committee, January 21, 1997 CONGRESSIONAL RECORD — HOUSE H223 directly or through counsel, that was mate- Gingrich did act intentionally, however it a single instance of reckless conduct. Rath- rial to matters under consideration by the would be difficult to establish that with a er, over a number of years and in a number Committee, which Mr. Gingrich knew or high degree of certainty. of situations, Mr. Gingrich showed a dis- should have known was inaccurate, incom- The culmination of the evidence on this regard and lack of respect for the standards plete, and unreliable. topic again left the Subcommittee with a of conduct that applied to his activities. 1. DELIBERATIONS ON THE TAX COUNTS disturbing choice. Either Mr. Gingrich inten- Under the Rules of the Committee, a rep- There was a difference of opinion regarding tionally made misrepresentations to the rimand is the appropriate sanction for a seri- whether to issue the SAV as drafted on the Committee, or he was again reckless in the ous violation of House Rules and a censure is tax counts. Concern was expressed about de- way he provided information to the Commit- appropriate for a more serious violation of ciding this tax issue in the context of an eth- tee concerning a very important matter. House Rules. Rule 20(g), Rules of the Com- ics proceeding. This led the discussion to the The standard applicable to the Sub- mittee on Standards of Official Conduct. It question of the appropriate focus for the committee’s deliberations was whether there was the opinion of the Subcommittee that Subcommittee. A consensus began to build is reason to believe that Mr. Gingrich had this matter fell somewhere in between. Ac- around the view that the proper focus was on acted as charged in this count of the SAV. cordingly, the Subcommittee and the Special the conduct of the Member, rather than a All felt that this standard had been met in Counsel recommend that the appropriate resolution of issues of tax law. From the be- regard to the allegation that Mr. Gingrich sanction should be a reprimand and a pay- ginning of the Preliminary Inquiry, there ‘‘knew’’ that the information he provided to ment reimbursing the House for some of the was a desire on the part of each of the Mem- the Committee was inaccurate. However, costs of the investigation in the amount of bers to find a way to reach a unanimous con- there was considerable discussion to the ef- $300,000. Mr. Gingrich has agreed that this is clusion in this matter. The Members felt it fect that if Mr. Gingrich wanted to admit to the appropriate sanction in this matter. was important to confirm the bipartisan na- submitting information to the Committee Beginning on December 15, 1996, Mr. Ging- ture of the ethics process. that he ‘‘should have known’’ was inac- rich’s counsel and the Special Counsel began The discussion turned to what steps Mr. curate, the Subcommittee would consider de- discussions directed toward resolving the Gingrich had taken in regard to these two leting the allegation that he knew the infor- matter without a disciplinary hearing. The projects to ensure they were done in accord mation was inaccurate. The Members were of discussions lasted through December 20, 1996. with the provisions of 501(c)(3). In particular, the opinion that if there were to be a final At that time an understanding was reached the Subcommittee was concerned with the adjudication of the matter, taking into ac- by both Mr. Gingrich and the Subcommittee fact that: (1) Mr. Gingrich had been ‘‘very count the higher standard of proof that is in- concerning this matter. That understanding well aware’’ of the American Campaign Acad- volved at that level, ‘‘should have known’’ was put on the record on December 21, 1996 emy case prior to embarking on these was an appropriate framing of the charge in by Mr. Cole follows: light of all the facts and circumstances. projects; (2) he had been involved with Mr. Cole: The subcommittee has had an op- 501(c)(3) organizations to a sufficient degree 3. DISCUSSIONS WITH MR. GINGRICH’S COUNSEL portunity to review the facts in this case, to know that politics and tax-deductible con- AND RECOMMENDED SANCTION and has had extensive discussion about the tributions are, as his tax counsel said, an On December 13, 1996, the Subcommittee appropriate resolution of this matter. ‘‘explosive mix;’’ (3) he was clearly involved issued an SAV charging Mr. Gingrich with Mr. Cardin: If I might just add here to your in a project that had significant partisan, po- three counts of violations of House Rules. next understanding, the Members of the sub- litical goals, and he had taken an aggressive Two counts concerned the failure to seek committee, prior to the adoption of the approach to the tax laws in regard to both legal advice in regard to the 501(c)(3) Statement of Alleged Violation, were con- AOW/ACTV; and (4) Renewing American Civ- projects, and one count concerned providing cerned that the nonpartisan deliberations of ilization projects. Even Mr. Gingrich’s own the Committee with information which he the subcommittee continue beyond the find- tax lawyer told the Subcommittee that if knew or should have known was inaccurate. ings of the subcommittee. Considering the Mr. Gingrich had come to him before em- At the time the Subcommittee voted this record of the full Ethics Committee in the barking on these projects, he would have ad- SAV, the Members discussed the matter 104th Congress and the partisan environment vised him to not use a 501(c)(3) organization among themselves and reached a consensus in the full House, the Members of the sub- for the dissemination of AOW/ACTV or Re- that it would be in the best interests of the committee felt that it was important to ex- newing American Civilization. Had Mr. Ging- House for the matter to be resolved without ercise bipartisan leadership beyond the rich sought and followed this advice, he going through a disciplinary hearing. It was workings of the subcommittee. * ** would not have used the 501(c)(3) organiza- estimated that such a hearing could take up Mr. Cole: It was the opinion of the Mem- tions, would not have had his projects sub- to three months to complete and would not bers of the subcommittee and the Special sidized by taxpayer funds, and would not begin for several months. Because of this, it Counsel, that based on the facts of this case have created this controversy that has was anticipated that the House would have as they are currently known, the appropriate caused significant disruption to the House. to deal with this matter for another six sanction for the conduct described in the The Subcommittee concluded that there months. Even though the Subcommittee original Statement of Alleged Violations is a were significant and substantial warning sig- Members felt that it would be advantageous reprimand and the payment of $300,000 to- nals to Mr. Gingrich that he should have to the House to avoid a disciplinary hearing, ward the cost of the preliminary inquiry. heeded prior to embarking on these projects. they all were committed to the proposition In light of this opinion, the subcommittee Despite these warnings, Mr. Gingrich did not that any resolution of the matter had to re- Members and the Special Counsel intend to seek any legal advice to ensure his conduct flect adequately the seriousness of the of- recommend to the full committee that this conformed with the provisions of 501(c)(3). fenses. To this end, the Subcommittee Mem- be the sanction recommended by the full In looking at this conduct in light of all bers discussed and agreed upon a rec- committee to the House. The Members also the facts and circumstances, the Sub- ommended sanction that was fair in light of intend to support this as the sanction in the committee was faced with a disturbing the conduct reflected in this matter, but ex- committee and on the Floor of the House. choice. Either Mr. Gingrich did not seek plicitly recognized that the full Committee However, if new facts are developed or legal advice because he was aware that it would make the ultimate decision as to the brought to the attention of the Members of would not have permitted him to use a recommendation to the full House as to the the subcommittee, they are free to change 501(c)(3) organization for his projects, or he appropriate sanction. In determining what their opinions. was reckless in not taking care that, as a the appropriate sanction should be in this The Subcommittee, through its counsel, Member of Congress, he made sure that his matter, the Subcommittee and Special Coun- has communicated this to Mr. Gingrich, conduct conformed with the law in an area sel considered the seriousness of the conduct, through his counsel. Mr. Gingrich has agreed where he had ample warning that his in- the level of care exercised by Mr. Gingrich, that if the subcommittee will amend the tended course of action was fraught with the disruption caused to the House by the Statement of Alleged Violations to be one legal peril. The Subcommittee decided that conduct, the cost to the House in having to count, instead of three counts, however, still regardless of the resolution of the 501(c)(3) pay for an extensive investigation, and the including all of the conduct described in the tax question, Mr. Gingrich’s conduct in this repetitive nature of the conduct. original Statement of Alleged Violations, regard was improper, did not reflect As is noted above, the Subcommittee was and will allow the addition of some language creditably on the House, and was deserving faced with troubling choices in each of the which reflects aspects of the record in this of sanction. areas covered by the Statement of Alleged matter concerning the involvement of Mr. 2. DELIBERATIONS CONCERNING THE LETTERS Violation. Either Mr. Gingrich’s conduct in Gingrich’s counsel in the preparation of the The Subcommittee’s deliberation concern- regard to the 501(c)(3) organizations and the letters described in the original Count 3 of ing the letters provided to the Committee letters he submitted to the Committee was the Statement of Alleged Violations,88 he centered on the question of whether Mr. intentional or it was reckless. Neither choice will admit to the entire Statement of Al- Gingrich intentionally submitted inaccurate reflects creditably on the House. While the leged Violation and agree to the view of the information. There was a belief that the Subcommittee was not able to reach a com- record developed before the Subcommittee fortable conclusion on these issues, the fact 88 These changes included the removal of the word was not conclusive on this point. The Special that the choice was presented is a factor in ‘‘knew’’ from the original Count 3, making the Counsel suggested that a good argument determining the appropriate sanction. In ad- charge read that Mr. Gingrich ‘‘should have known’’ could be made, based on the record, that Mr. dition, the violation does not represent only the information was inaccurate. H224 CONGRESSIONAL RECORD — HOUSE January 21, 1997 subcommittee Members and the Special of the agreement had occurred and retained useful to the IRS as part of its reported on- Counsel as to the appropriate sanction. the right to withdraw from the agreement going investigations of various 501(c)(3) orga- In light of Mr. Gingrich’s admission to the with appropriate notice to Mr. Gingrich. To nizations, the Subcommittee decided to rec- Statement of Alleged Violation, the sub- date no such notice has been given. ommend that the full Committee make committee is of the view that the rules of X. SUMMARY OF FACTS PERTAINING TO USE OF available to the IRS all relevant documents the committee will not require that an adju- UNOFFICIAL RESOURCES produced during the Preliminary Inquiry. It dicatory hearing take place; however, a sanc- The Subcommittee investigated allega- is the Committee’s recommendation that the tion hearing will need to be held under the tions that Mr. Gingrich had improperly uti- House Committee on Standards of Official rules. lized the services of Jane Fortson, an em- Conduct in the 105th Congress establish a li- The subcommittee and Mr. Gingrich desire ployee of the Progress in Freedom Founda- aison with the IRS to fulfill its recommenda- to have the sanction hearing concluded as tion (‘‘PFF’’), in violation of House Rule 45, tion and that this liaison be established in expeditiously as possible, but it is under- which prohibits the use of unofficial re- consultation with Mr. Cole. stood that this will not take place at the ex- sources for official purposes. A P P E N D I X pense of orderly procedure and a full and fair Ms. Fortson was an investment banker and opportunity for the full committee to be in- chair of the Atlanta Housing Project who SUMMARY OF LAW PERTAINING TO ORGANIZA- formed of any information necessary for had experience in urban and housing issues. TIONS EXEMPT FROM FEDERAL INCOME TAX each Member of the full committee to be In January 1995 she moved to Washington, UNDER SECTION 501(c)(3) OF THE INTERNAL able to make a decision at the sanction hear- D.C., from Atlanta to work on urban and REVENUE CODE ing. housing issues as a part-time PFF Senior A. Introduction After the subcommittee has voted a new Fellow and subsequently became a full-time Statement of Alleged Violation, Mr. Ging- PFF Senior Fellow in April, 1995. Section 501(a) of the Internal Revenue Code rich will file his answer admitting to it. The The Subcommittee determined that Mr. generally exempts from federal income tax- subcommittee will seek the permission of Gingrich sought Ms. Fortson’s advice on ation numerous types of organizations. the full committee to release the Statement urban and housing issues on an ongoing and Among these are section 501(c)(3) organiza- of Alleged Violation, Mr. Gingrich’s answer, meaningful basis. During an interview with tions which include corporations: Organized and a brief press release which has been ap- Mr. Cole, Mr. Gingrich stated that although and operated exclusively for religious, chari- proved by Mr. Gingrich’s counsel. At the he believed he lacked the authority to give table, scientific * * * or educational pur- same time, Mr. Gingrich will release a brief Ms. Fortson assignments, he often requested poses * * * no part of the net earnings of press release that has been approved by the her assistance in connection with urban is- which inures to the benefit of any private subcommittee’s Special Counsel. sues in general and issues pertaining to the shareholder or individual, no substantial Both the subcommittee and Mr. Gingrich District of Columbia in particular. The in- part of the activities of which is carrying on agree that no public comment should be vestigation further revealed that Ms. propaganda, or otherwise attempting, to in- made about this matter while it is still pend- Fortson appeared to have had unusual access fluence legislation, * * * and which does not ing. This includes having surrogates sent out to Mr. Gingrich’s official schedule and may participate in, or intervene in * * * any po- to comment on the matter and attempt to have occasionally influenced his official staff litical campaign on behalf of (or in opposi- mischaracterize it. in establishing his official schedule. tion to) any candidate for public office. Accordingly, beyond the press statements In her capacity as an unofficial policy ad- I.R.C. § 501(c)(3). Organizations described in described above, neither Mr. Gingrich nor visor to Mr. Gingrich, Ms. Fortson provided section 501(c)(3) are generally referred to as any Member of the subcommittee may make ongoing advice to Mr. Gingrich and members ‘‘charitable’’ organizations and contribu- any further public comment. Mr. Gingrich of Mr. Gingrich’s staff to assist Mr. Gingrich tions to such organizations are generally de- understands that if he violates this provi- in conducting official duties related to urban ductible to the donors. I.R.C. § 170(a)(1), sion, the subcommittee will have the option issues. Ms. Fortson frequently attended (c)(2). of reinstating the original Statement of Al- meetings with respect to the D.C. Task B. The Organizational Test and the Operational leged Violations and allowing Mr. Gingrich Force during which she met with Members of Test an opportunity to withdraw his answer. Congress, officials of the District of Colum- The requirement that a 501(c)(3) organiza- And I should note that it is the intention bia, and members of their staffs. Although tion be ‘‘organized and operated exclusively’’ of the subcommittee that ‘‘public com- Mr. Gingrich and principal members of his for an exempt purpose has given rise to an ments’’ refers to press statements; that, ob- staff advised the Subcommittee that they ‘‘organizational test’’ and an ‘‘operational viously, we are free and Mr. Gingrich is free perceived Ms. Fortson’s assistance as limited test.’’ Failure to meet either test will pre- to have private conversations with Members to providing information on an informal vent an organization from qualifying for ex- of Congress about these matters.89 basis, the Subcommittee discovered other emption under section 501(c)(3). Treas. Reg. After the Subcommittee voted to issue the occurrences which suggested that Mr. Ging- § 1.501(c)(3)–1(a); Levy Family Tribe Founda- substitute SAV, the Special Counsel called rich and members of his staff specifically so- tion v. Commissioner, 69 T.C. 615, 618 (1978). Mr. Gingrich’s counsel and read to him what licited Ms. Fortson’s views and assistance was put on the record concerning this mat- with respect to official matters. 1. ORGANIZATIONAL TEST ter. Mr. Gingrich’s counsel then delivered to The Subcommittee acknowledges that To satisfy the organizational test, an orga- the Subcommittee Mr. Gingrich’s answer ad- Members may properly solicit information nization must meet three sets of require- mitting to the Statement of Alleged Viola- from outside individuals and organizations, ments. First, its articles of organization tion. including nonprofit and for-profit organiza- must: (a) limit its purposes to one or more D. Post-December 21, 1996 Activity tions. Regardless of whether auxiliary serv- exempt purposes, and (b) not expressly per- Following the release of this Statement of ices are accepted from a nonprofit or for- mit substantial activities that do not further Alleged Violation, numerous press accounts profit organization, Members must exercise those exempt purposes. Treas. Reg. appeared concerning this matter. In the caution to limit the use of outside resources § 1.501(c)(3)–1(b)(1). Second, the articles must opinion of the Subcommittee Members and to ensure that the duties of official staff are not permit: (a) devoting more than an insub- the Special Counsel, a number of the press not improperly supplanted or supplemented. stantial part of its activities to lobbying, (b) accounts indicated that Mr. Gingrich had The Subcommittee notes that although Mr. any participation or intervention in the violated the agreement concerning state- Gingrich received two letters of reproval campaign of a candidate for public office, ments about the matter. Mr. Gingrich’s from the Committee on Standards regarding and (c) objectives and activities that would counsel was notified of the Subcommittee’s the use of outside resources, Ms. Fortson’s characterize it as an ‘‘action’’ organization. concerns and the Subcommittee met to con- activities ceased prior to the date the Com- Treas. Reg. § 1.501(c)(3)–1(b)(3). Third, the or- sider what action to take in light of this ap- mittee issued those letters to Mr. Gingrich. ganization’s assets must be dedicated to ex- parent violation. The Subcommittee deter- While the Subcommittee did not find that empt purposes. Treas. Reg. § 1.501(c)(3)– mined that it would not nullify the agree- Ms. Fortson’s individual activities violated 1(b)(4). The IRS determines compliance with ment. While there was serious concern about House Rules, the Subcommittee determined the organizational test solely by reference to whether Mr. Gingrich had complied with the that the regular, routine, and ongoing assist- an organization’s articles of organization. agreement, the Subcommittee was of the ance she provided Mr. Gingrich and his staff 2. OPERATIONAL TEST opinion that the best interests of the House over a ten-month period could create the ap- To satisfy the operational test, an organi- still lay in resolving the matter without a pearance of improper commingling of unoffi- zation must be operated ‘‘exclusively’’ for an disciplinary hearing and with the rec- cial and official resources. The Subcommit- exempt purpose. Though ‘‘exclusively’’ in ommended sanction that its Members had tee determined, however, that these activi- this context does not mean ‘‘solely,’’ the previously determined was appropriate. How- ties did not warrant inclusion as a Count in presence of a substantial nonexempt purpose ever, Mr. Gingrich’s counsel was informed the Statement of Alleged Violation. will cause an organization to fail the oper- that the Subcommittee believed a violation XI. AVAILABILITY OF DOCUMENTS TO INTERNAL ational test. Treas. Reg. § 1.501(c)(3)–1(c)(1); REVENUE SERVICE The Nationalist Movement v. Commissioner, 102 89 It was also agreed that in the private conversa- In light of the possibility that documents T.C. 558, 576 (1994). The presence of a single tions Mr. Gingrich was not to disclose the terms of which were produced to the Subcommittee non-exempt purpose, if substantial in nature, the agreement with the Subcommittee. during the Preliminary Inquiry might be will destroy the exemption regardless of the January 21, 1997 CONGRESSIONAL RECORD — HOUSE H225 number or importance of truly exempt pur- (b) [t]he instruction of the public on sub- understanding on the part of the intended poses. Better Business Bureau of Washington, jects useful to the individual and beneficial audience or readership because it does not D.C. v. United States, 326 U.S. 276, 283 (1945); to the community. consider their background or training in the Manning Association v. Commissioner, 93 T.C. Treas. Reg. § 1.501(c)(3)–1(d)(3)(i). The subject matter. 596, 611 (1989). Regulations continue: According to Rev. Proc. 86–43, the IRS uses To meet the operational test under section An organization may be educational even the methodology test in all situations where 501(c)(3) organization, the organization must though it advocates a particular position or the educational purpose of an organization satisfy the following requirements: 90 viewpoint so long as it presents a suffi- that advocates a viewpoint or position is in 1. The organization must be operated for ciently full and fair exposition of the perti- question. However, ‘‘[e]ven if the advocacy an exempt purpose, and must serve a public nent facts as to permit an individual or the undertaken by an organization is determined benefit, not a private benefit. Treas. Reg. public to form an independent opinion or to be educational under [the methodology § 1.501(c)(3)–1(d)(1)(ii). conclusion. On the other hand, an organiza- test], the organization must still meet all 2. It must not be an ‘‘action’’ organization. tion is not educational if its principal func- other requirements for exemption under sec- Treas. Reg. § 1.501(c)(3)–1(c)(3). An organization is the mere presentation of unsupported tion 501(c)(3) * * *’’ Rev. Proc. 86–43. That is, tion is an ‘‘action’’ organization if: opinion. organizations deemed to be ‘‘educational’’ a. it participates or intervenes in any po- Id. Guidance on the phrase ‘‘advocates a par- must also abide by the section 501(c)(3) pro- litical campaign (Treas. Reg. § 1.501(c)(3)– hibitions on: (a) private benefit, (b) partici- 1(c)(3)(iii)); ticular position or viewpoint’’ can be found in the preceding section in the Regulations pating or intervening in a political cam- b. a substantial part of its activities con- paign, (c) engaging in more than insubstan- sists of attempting to influence legislation pertaining to the definition of ‘‘charitable.’’ The fact that an organization, in carrying tial lobbying activities, and (d) private (Treas. Reg. § 1.501(c)(3)–1(c)(3)(ii)); or inurement. c. its primary objective may be attained: out its primary purpose, advocates social or only by legislation or defeat of proposed leg- civil changes or presents opinion on con- b. To Satisfy the Operational Test, an Organi- islation, and it advocates the attainment of troversial issues with the intention of mold- zation Must Not Violate the ‘‘Private Benefit’’ such primary objective (Treas. Reg. ing public opinion or creating public senti- Prohibition § 1.501(c)(3)–1(c)(3)(iv)). ment to an acceptance of its views does not preclude such organization from qualifying Section 501(c)(3) requires, inter alia, that 3. Its net earnings must not inure to the an organization be organized and operated benefit of any person in a position to influ- under section 501(c)(3) so long as it is not an ‘‘action’’ organization.* * * exclusively for one or more exempt purposes. ence the organization’s activities. Treas. Treas. Reg. 1.501(c)(3)–1(d)(1)(ii) provides that Reg. § 1.501(c)(3)–1(c)(2). Treas. Reg. § 1.501(c)(3)–1(d)(2). In applying the Regulations under section an organization does not meet this require- ‘‘[F]ailure to satisfy any of the [above] re- ment: quirements is fatal to [an organization’s] 501(c)(3) pertaining to educational organiza- unless it serves a public rather than a pri- qualification under section 501(c)(3).’’ Amer- tions, the IRS has stated that its goal is to ican Campaign Academy v. Commissioner, 92 eliminate or minimize the potential for any vate purpose. Thus, * * * it is necessary for T.C. 1053, 1062 (1989). public official to impose his or her pre- an organization to establish that it is not or- The application of these requirements, conceptions or beliefs in determining wheth- ganized or operated for the benefit of private moreover, is a factual exercise. Id. at 1064; er the particular viewpoint or position is interests such as designated individuals, the Christian Manner International v. Commis- educational. Rev. Proc. 86–43, 1986–2 C.B. 729. creator or his family, shareholders of the or- sioner, 71 T.C. 661, 668 (1979). Thus, in testing IRS policy is to ‘‘maintain a position of dis- ganization, or persons controlled, directly or compliance with the operational test, courts interested neutrality with respect to the be- indirectly, by such private interests. look ‘‘beyond the four corners of the organi- liefs advocated by an organization.’’ Id. The The ‘‘private benefit’’ prohibition serves to zation’s charter to discover ‘the actual ob- focus of the Regulations pertaining to edu- ensure that the public subsidies flowing from jects motivating the organization and the cational organizations and of the IRS’s ap- section 501(c)(3) status, including income tax subsequent conduct of the organization.’ ’’ plication of these Regulations ‘‘is not upon exemption and the ability to receive tax-de- American Campaign Academy, 92 T.C. at 1064 the viewpoint or position, but instead upon ductible charitable contributions, are re- (citing Taxation with Representation v. United the method used by the organization to com- served for organizations that are formed to States, 585 F.2d 1219, 1222 (4th Cir. 1978)); see municate its viewpoint or positions to oth- serve public and not private interests. Treas. also Sound Health Association v. Commissioner, ers.’’ Id. Reg. 1.501(c)(3)–1(c)(1) defines the application 71 T.C. 158, 184 (1978) (‘‘It is the purpose to- Two court decisions considered challenges of the private benefit prohibition in the con- ward which an organization’s activities are to the constitutionality of the definition of text of the operational test: directed that is ultimately dispositive of the ‘‘educational,’’ in the Regulations cited An organization will be regarded as ‘‘oper- above. One decision held that the definition organization’s right to be classified as a sec- ated exclusively’’ for one or more exempt was unconstitutionally vague. Big Mama tion 501(c)(3) organization.’’) purposes only if it engages primarily in ac- Rag, Inc. v. United States, 631 F.2d 1030 (D.C. ‘‘What an organization’s purposes are and tivities which accomplish one or more of Cir. 1980). In National Alliance v. United what purposes its activities support are such exempt purposes specified in section States, 710 F.2d 868 (D.C. Dir. 1983), the court questions of fact.’’ American Campaign Acad- 501(c)(3). An organization will not be so re- upheld the IRS’s position that the organiza- emy, 92 T.C. at 1064 (citing Christian Manner garded if more than an insubstantial part of tion in question was not educational. With- International v. Commissioner, 71 T.C. 661, 668 its activities is not in furtherance of an ex- out ruling on the constitutionality of the (1979)). Courts may ‘‘draw factual inferences’’ empt purpose. ‘‘methodology test’’ used by the IRS in that from the record when determining whether The Regulations and cases applying them organizations meet the requirements of the case to determine whether the organization was educational, the court found that the ap- make it clear that the private benefit test tax-exempt organization laws and regula- focuses on the purpose or purposes served by tions. Id. (citing National Association of Amer- plication of that test reduced the vagueness found in Big Mama Rag. The IRS later pub- an organization’s activities, and not on the ican Churches v. Commissioner, 82 T.C. 18, 20 nature of the activities themselves. See, e.g., (1984)). lished the methodology test in Rev. Proc. 86– 43 in order to clarify its position on how to B.S.W. Group, Inc. v. Commissioner, 70 T.C. 352 a. ‘‘Educational’’ Organizations May Qualify determine whether an organization is edu- (1978). Where an organization’s activities for Exemption Under Section 501(c)(3) cational when it advocates particular view- serve more than one purpose, each purpose As discussed above, an organization may points or positions. As set forth in the Reve- must be separately examined to determine qualify for exemption under section 501(c)(3) nue Procedure: whether it is private in nature and, if so, if it is ‘‘educational.’’ 91 The Regulations de- The presence of any of the following fac- whether it is more than insubstantial. Chris- fine the term ‘‘educational’’ as relating to: tors in the presentations made by an organi- tian Manner International v. Commissioner, 71 (a) [t]he instruction or training of the indi- zation is indicative that the method used by T.C. 661 (1979). vidual for the purpose of improving or devel- the organization to advocate its viewpoints The leading case on the application of the oping his capabilities; or or positions is not educational. private benefit prohibition in the context of (a) The presentation of viewpoints or posi- an organization whose activities served both tions unsupported by facts is a significant exempt and nonexempt purposes is Better 90 501(c)(3) organizations must also: (a) not be operated primarily to conduct an unrelated trade or portion of the organization’s communica- Business Bureau v. United States, 326 U.S. 279 business (Treas. Reg. § 1.501(c)(3)–1(e)(1)), and (b) not tions. (1945). Better Business Bureau was a non- violate ‘‘public policy.’’ See Bob Jones University v. (b) The facts that purport to support the profit organization formed to educate the United States, 461 U.S. 574 (1983) (educational organi- viewpoints or positions are distorted. public about fraudulent business practices, zation’s tax-exempt status denied because of its ra- (c) The organization’s presentations make to elevate business standards, and to educate cially discriminatory policies). substantial use of inflammatory and dispar- consumers to be intelligent buyers. The 91 An organization may also qualify for section aging terms and express conclusions more on Court did not question the exempt purpose of 501(c)(3) exemption if it is organized and operated for, e.g., ‘‘religious,’’ ‘‘charitable,’’ or ‘‘scientific’’ the basis of strong emotional feelings than of these activities. The Court found, however, purposes. The other methods by which an organiza- objective evaluations. that the organization was ‘‘animated’’ by the tion can qualify for exemption are not discussed in (d) The approach used in the organization’s purpose of promoting a profitable business this summary. presentations is not aimed at developing an community, and that such business purpose H226 CONGRESSIONAL RECORD — HOUSE January 21, 1997 was both nonexempt and more than insub- selected group of attorneys are the primary fit was incidental to the library’s ex- stantial. The Court denied exemption, stat- beneficiaries of the service. The referral empt purpose and a ‘‘logical by-product ing (in language that is cited in virtually all service is intended to benefit the public and of an educational process.’’ later private benefit cases), that: not to serve as a source of referrals. We find [I]n order to fall within the claimed ex- any nonexempt purpose served by the refer- Id. emption, an organization must be devoted to ral service and any occasional economic ben- Two other revenue rulings with similar educational purposes exclusively. This plain- efit flowing to individual attorneys through fact patterns are also helpful in understand- ly means that the presence of a single non- a referral incidental to the broad charitable ing the application of the ‘‘incidental bene- educational purpose, if substantial in nature, purpose served. fits’’ concept. In one ruling, the IRS ruled will destroy the exemption regardless of the that an organization that limited member- Id. at 926. ship to the residents of one city block did number or importance of truly educational Reiterating the proposition that ‘‘the prop- purposes. not qualify as a 501(c)(3) organization be- er focus is the purpose or purposes toward cause the organization’s members benefited Id. at 283. which the activities are directed,’’ the court directly, thus not incidentally, from the or- Many of the cases interpreting the private found that the purpose of the legal referral ganization’s activities. Rev. Rul. 75–286, 1975– benefit prohibition involve private benefits service was to benefit the public, that any 2 C.B. 210. In another, the IRS ruled that an that are provided in a commercial context— private benefit was broadly distributed, not organization dedicated to beautification of as in the Better Business Bureau case. Imper- conferred on any select group of attorneys an entire city qualified as a 501(c)(3) organi- missible private benefit, however, need not and incidental to the public purpose, and zation because benefits flowed to the city’s be financial in nature. Callaway Family Asso- that the organization qualified for exemp- entire population and were not targeted to ciation v. Commissioner, 71 T.C. 340 (1978), in- tion under section 501(c)(3). Id. at 923, 925–26 the organization’s members. Rev. Rul. 68–14, volved a family association formed as a non- (citing B.S.W. Group v. Commissioner, 70 T.C. 1968–1 C. B. 243. The benefits to the organiza- profit corporation to study immigration to 352, 356–57 (1978)). tion’s members of living in a cleaner city and migration within the United States by As the cases described above show, the de- were considered incidental. focusing on its own family history and gene- termination as to whether private benefit is The IRS issued a recent warning about the alogy. The organization’s activities included incidental (and therefore permissible) or importance of the private benefit prohibition researching the genealogy of Callaway fam- more than incidental (and therefore prohib- in Rev. Proc. 96–32, 1996–20 I.R.B. 14, a Reve- ily members in order to publish a family his- ited) is inherently factual, and each case nue Procedure issued for the purpose of es- tory. The organization argued that its pur- must be decided on its own facts and cir- tablishing standards as to whether organiza- poses were educational and intended to bene- cumstances. See also Manning Association v. tions that own and operate low income hous- fit the general public, asserting that its use Commissioner, 93 T.C. 596 (1989). The IRS has ing (an activity conducted by both nonprofit of a research methodology focusing on one issued several published and private rulings and for-profit organizations) may qualify for family’s development was a way of educating and general counsel memoranda 92 that fur- exemption under section 501(c)(3). After re- the public about the country’s history. ther explain the private benefit prohibition. viewing the substantive criteria that must In Callaway, the court noted (and the IRS For example, in Rev. Rul. 70–186, 1970–1 C.B. be present to establish that the organization conceded) that the organization’s activities 128, an organization was formed to preserve a is formed for a charitable purpose, the IRS served an educational purpose. The issue was lake as a public recreational facility and to added a final caution: not whether the organization had any ex- improve the lake water’s condition. Al- If an organization furthers a charitable empt purposes, but whether it also engaged though the organization’s activities bene- purpose such as relieving the poor and dis- in activities that furthered a nonexempt pur- fited the public at large, there were nec- tressed, it nevertheless may fail to qualify pose more than insubstantially. Agreeing essarily significant benefits to the individ- for exemption because private interests of with the IRS that ‘‘petitioner aimed its or- uals who owned lake-front property. The individuals with a financial stake in the ganizational drive at Callaway family mem- project are furthered. For example, the role bers, and appealed to them on the basis of IRS, however, determined that the private benefit to the lake-front property owners of a private developer or management com- their private interests,’’ the court concluded pany in the organization’s activities must be that the organization ‘‘engages in non- was incidental because: [t]he benefits to be derived from the organi- carefully scrutinized to ensure the absence of exempt activities serving a private interest, inurement or impermissible private benefit and these activities are not insubstantial.’’ zation’s activities flow principally to the general public through the maintenance and resulting from real property sales, develop- Id. at 343–44. Accordingly, the court held that ment fees, or management contracts. the organization did not qualify for exemp- improvement of public recreational facilities. Any private benefits derived by the Id. tion under section 501(c)(3). One of the most detailed explanations of lakefront property owners do not lessen the Kentucky Bar Foundation v. Commissioner, the private benefit prohibition is contained public benefits flowing from the organiza- 78 T.C. 921 (1982), is one of the relatively few in G.C.M. 39862 (Nov. 22, 1991), involving the tion’s operations. In fact, it would be impos- cases in which a court found private benefit permissibility of a hospital’s transaction sible for the organization to accomplish its to be insubstantial and therefore not to pre- with physicians. In the G.C.M., the IRS ex- purposes without providing benefits to the clude exemption under section 501(c)(3). The plained the prohibition as follows: lakefront property owners. Kentucky Bar Foundation was formed to Any private benefit arising from a particu- conduct a variety of activities recognized by Id. lar activity must be ‘‘incidental’’ in both a the IRS to serve exclusively educational pur- In Rev. Rul. 75–196, 1975–1 C.B. 155, the IRS qualitative and quantitative sense to the poses, including a continuing legal education ruled that a 501(c)(3) organization operating overall public benefit achieved by the activ- program and the operation of a public law li- a law library whose rules essentially limited ity if the organization is to remain exempt. brary. The IRS, however, asserted that the access and use to local bar association mem- To be qualitatively incidental, a private ben- Foundation’s operation of statewide lawyer bers conferred only incidental benefits to the efit must occur as a necessary concomitant referral service also served private purposes. bar association members. The library’s of the activity that benefits the public at Through the referral service, a person seek- availability only to a designated class of per- large; in other words, the benefit to the pub- ing a lawyer was referred to an attorney se- sons was not a bar to recognition of exemp- lic cannot be achieved without necessarily lected on a rotating basis within a convention because: benefiting private individuals. Such benefits ient geographic area. The fee for an initial [w]hat is of importance is that the class ben- might also be characterized as indirect or half-hour consultation was $10; any charge efited be broad enough to warrant a conclu- unintentional. To be quantitatively inciden- for further consultation or work had to be sion that the educational facility or activity tal, a benefit must be insubstantial when agreed upon by the attorney and the client. is serving a broad public interest rather than viewed in relation to the public benefit con- The court found that the purposes of the re- a private interest, and is therefore exclu- ferred by the activity. ferral service were to assist the general pub- sively educational in nature. lic in locating an attorney to provide a con- Id. The IRS also explained that the insubstan- sultation for a reasonable fee, to encourage Id. The library was available to a sig- tiality of the private benefit is measured lawyers to recognize the obligation to pro- nificant number of people, and the re- only in relationship to activity in which the vide legal services to the general public, and strictions on the library’s use were due private benefit is present, and not in relation to acquaint people in need of legal services to the limited size of its facilities. Al- to the organization’s overall activities: with the value of consultation with a lawyer though attorneys who used the library to identify and solve legal problems. might derive personal benefit in their It bears emphasis that, even though exemption of the entire organization may be at The IRS asserted that a purpose of the re- practice, the IRS ruled that this bene- ferral service was to benefit lawyers, par- stake, the private benefit conferred by an ac- ticularly to help young law school graduates tivity or arrangement is balanced only establish a practice, and that this was a sub- 92 Private letter rulings and general counsel against the public benefit conferred by that stantial nonexempt purpose. Based on a care- memoranda are made available to the public under activity or arrangement, not the overall section 6110 of the Code. These documents are based good accomplished by the organization. ful examination of the facts, however, the on the facts of particular cases, and may not be re- court found that: lied on as precedent. However, they provide useful Id. [t]he referral service is open to all respon- insights as to how the IRS interprets and applies the In G.C.M. 39862, the IRS balanced the pri- sible attorneys, and there is no evidence a law in particular factual situations. vate benefits to the physicians from the January 21, 1997 CONGRESSIONAL RECORD — HOUSE H227 transaction at issue with the public purposes court’s holding that the Academy was orga- they would do so. Absent an ability to con- served by that particular activity—and not nized for a non-exempt purpose. The IRS did trol the students’ employment, the Academy the public purposes served by the hospital as not argue, and the court did not hold, for ex- argued, it lacked the ability to confer sec- a whole. Finding the private purposes from ample, that individuals who are all members ondary benefits to Republican candidates the activity at issue to be more than inci- of the same political party are prohibited and entities. Id. at 1078. The Court found dental in relation to the public purposes, the from operating a 501(c)(3) organization, or that there was no authority for the propo- IRS determined that the hospital had jeop- that an organization may not receive an ex- sition that the organization must be able to ardized its exemption under section 501(c)(3). emption under section 501(c)(3) if a partisan control non-incidental benefits. Further- Although most of the cases and IRS rul- organization funds it. Rather, the Tax Court more, the Court reiterated that the record ings (both public and private) follow the gen- focused on the purpose behind ACA’s activi- supported the IRS’s determination that the eral analysis described above in determining ties. In determining this, it drew ‘‘factual in- Academy was formed ‘‘with a substantial whether or not private benefit is insubstan- ferences’’ from the record to discern that purpose to train campaign professionals for tial, a fairly recent Tax Court case, American purpose. Those inferences led to the court’s service in Republican entities and cam- Campaign Academy v. Commissioner, 92 T.C. conclusion that the Academy ‘‘targeted Re- paigns, an activity previously conducted by 1053 (1989) adopts a slightly different ap- publican entities and candidates to receive NRCC.’’ Id. According to the Court, accept- proach. In that case, the primary activity of the secondary benefit through employing its ing the Academy’s argument regarding its American Campaign Academy (‘‘ACA’’ or alumni * * *.’’ Id. at 1075. inability to control non-incidental benefits ‘‘the Academy’’) was the operation of a The Tax Court’s analysis distinguished be- would ‘‘cloud the focus of the operational school to train people to work in political tween ‘‘primary’’ private benefit and ‘‘sec- test, which probes to ascertain the purpose campaigns. The IRS denied ACA’s applica- ondary’’ private benefit, and made clear that towards which an organization’s activities tion for exemption under section 501(c)(3), the latter can be a bar to section 501(c)(3) are directed and not the nature of the activi- and ACA appealed the denial to the Tax qualification. In this case, the students re- ties themselves.’’ Id. at 1078–79 (citing B.S.W. Court. The Tax Court upheld the IRS’s de- ceived the primary private benefit of the Group v. Commissioner, 70 T.C. 352, 356–57 nial of ACA’s application for exemption be- Academy, and this benefit was permissible (1978)). The Court noted that had the record cause ACA’s activities conferred an imper- and consistent with the Academy’s edu- demonstrated that ‘‘the Academy’s activities missible private benefit on Republican can- cational purposes. The students’ ultimate were nonpartisan in nature and that its grad- didates and entities. employers, Republican candidates and enti- uates were not intended to primarily benefit The school operated by ACA was an ‘‘out- ties, received the secondary benefits of the Republicans,’’ the Court would have found growth’’ of programs the National Repub- Academy. ‘‘[W]here the training of individ- for the Academy. Id. at 1079. lican Congressional Committee (‘‘NRCC’’) uals is focused on furthering a particular The American Campaign Academy case fol- once sponsored to train candidates and to targeted private interest [e.g., Republican lows existing precedent. In reaching its deci- train campaign professionals for Republican candidates and entities], the conferred sec- sion, the court relies on Better Business Bu- campaigns. The Academy program, however, ondary benefit ceases to be incidental to the reau and Kentucky Bar Foundation, among differed from its NRCC predecessor in that it providing organization’s exempt purposes.’’ other cases, for the legal standards govern- limited its students to ‘‘campaign profes- Id. at 1074. ing the private benefit prohibition. The sionals.’’ Id. at 1056. Without discussion, the For the Academy to have prevailed, ac- court recognizes that the ACA’s activities IRS stated that the Academy did not train cording to the Tax Court, it needed to dem- were intended to serve multiple purposes, in- candidates, participate in any political cam- onstrate: (1) that the candidates and entities cluding the education of students (the per- paign or attempt to influence legislation. Id. who received the benefit of trained cam- missible primary benefit) and the provision at 1056–57. The Academy did not use training paigned workers possessed the characteris- of trained campaign professionals for can- materials developed by the NRCC, generally tics of a ‘‘charitable class,’’ 93 and (2) that it didates and entities (the secondary benefit). did not use NRCC faculty, and developed its did not distribute benefits among that class Finding the secondary benefit to be targeted own courses. Id. at 1057. Students were not in a select manner. Id. at 1076. The Academy to a select group—Republican candidates and explicitly required to be affiliated with any argued that Republican candidates and enti- entities—the court concludes that such bene- particular party, nor were they required to ties were ‘‘charitable’’ because the Repub- fit is more than incidental and therefore pre- take positions with partisan organizations lican party consists of millions of people cludes exemption under section 501(c)(3). upon graduation. Id. at 1058. with ‘‘like ‘political sympathies’ ’’ and their c. To Satisfy The Operational Test, An Organi- The Academy had a number of direct and activities benefited the community at large. zation Must Not Be An ‘‘Action’’ Organiza- indirect connections to Republican organiza- Id. The Court ruled, however, that size alone tion tions. The NRCC contributed furniture and does not transform a benefited class into a An organization is not operated exclu- computer hardware to the Academy. Id. at charitable class and that ACA had failed to sively for one or more exempt purposes if it 1056. One of the Academy’s three directors, demonstrate that political entities and can- is an ‘‘action’’ organization. Treas. Reg. Joseph Gaylord, was the Executive Director didates possessed the characteristics of a § 1.501(c)(3)–1(c)(3). Such an organization can- of the NRCC; another director, John McDon- charitable class. Id. At 1077. Moreover, the not qualify for exemption under section ald, was a member of the Republican Na- Tax Court held that even if political can- 501(c)(3). Treas. Reg. § 1.501(c)(3)–1(c)(3)(v). An tional Committee. Id. Jan Baran, General didates and entities could be found to con- organization is an action organization if: Counsel of the NRCC at the time of the stitute a ‘‘charitable class,’’ ACA’s benefits (i) It ‘‘participates or intervenes, directly Academy’s application to IRS, incorporated were distributed in a select manner to Re- or indirectly, in any political campaign on the Academy. Id. at 1070. The National Re- publican candidates and entities. Id. behalf of or in opposition to any candidate Finally, the Academy argued that al- publican Congressional Trust funded the for public office;’’ though it hoped that alumni would work in Academy. Id. The Academy curriculum in- (ii) a ‘‘substantial part’’ of its activities Republican organizations or for Republican cluded studies of the ‘‘Growth of NRCC, etc.’’ consists of ‘‘attempting to influence legisla- candidates, it had no control over whether and ‘‘Why are people Republicans,’’ but did tion by propaganda, or otherwise;’’ or not contain comparable studies pertaining to (iii) its primary objective may be attained the Democratic or other political parties. Id. 93 This part of the Tax Court’s analysis in American ‘‘only by legislation or a defeat of proposed at 1070–71. People on the admissions panel Campaign Academy has been criticized by a few com- legislation,’’ and ‘‘it advocates, or campaigns were affiliated with the Republican Party. mentators, who have disagreed with the court’s ap- for, the attainment’’ of such primary objec- plication of the ‘‘charitable class’’ doctrine in the Id. at 1071. Furthermore, while the appli- tive. cants were not required to declare a party af- context of an educational organization. See, e.g., Bruce R. Hopkins, Republican Campaign School filiation on their application, the political Treas. Reg. § 1.501(c)(3)–1(c)(3). Held Not Tax Exempt, The Nonprofit Counsel, July (i) If an Organization Participates in a Political references students were required to submit 1989, at 3; Laura B. Chisolm, Politics and Charity: A ‘‘often permit[ted] the admission panel to Proposal for Peaceful Coexistence, 58 Geo. Wash. L. Campaign, It is an Action Organization Not deduce the applicant’s political affiliation.’’ Rev. 308, 344 n.159 (1990). Entitled to Exemption Under Section Id. Finally, the Court found that all but one Typically an educational organization is expected 501(c)(3) of the Academy graduates who could be iden- to serve a broad class representative of the public Section 501(c)(3) provides that an organiza- tified as later serving in political positions interest, but not a ‘‘charitable class’’ per se. The tion is not entitled to exemption if it court’s consideration of the question as to whether ‘‘participate[s] in, or intervene[s] in (includ- ended up serving Republican candidates or political candidates and entities could constitute a Republican organizations. Id. at 1060, 1071, charitable class might be misplaced, but is not criti- ing the publishing or distributing of state- 1072. cal to its holding. As the court notes, ‘‘even were we ments) any political campaign on behalf of In light of these facts, the Tax Court to find political entities and candidates to generally (or in opposition to) any candidate for public upheld the IRS’s denial of the Academy’s ap- comprise a charitable class, petitioner would bear office.’’ The reason for this prohibition is plication for exemption under section the burden of proving that its activities benefited clear. Contributions to section 501(c)(3) orga- 501(c)(3) because the Academy ‘‘conducted its the members of the class in a nonselect manner.’’ nizations are deductible for federal income educational activities with the partisan ob- The court’s finding that such benefits were con- tax purposes, but contributions to can- ferred in a select manner—to Republican candidates jective of benefiting Republican candidates and entities—was the basis for its holding that the didates and political action committees and entities.’’ Id. at 1070. Any one of the organization served private purposes more than inci- (‘‘PACs’’) are not. The use of section 501(c)(3) facts listed in the previous paragraph did not dentally and, therefore, failed to qualify for exemp- organizations to support or oppose can- alone support the IRS’s finding or the tion under section 501(c)(3). didates or PACs would circumvent federal H228 CONGRESSIONAL RECORD — HOUSE January 21, 1997 tax law by enabling candidates or PACs to that ‘‘[t]he prohibition on political campaign there is a substantial body of authority con- attract tax-deductible contributions to fi- activities * * * reflect[s] congressional poli- cerning what section 501(c)(3) organizations nance their election activities. As the U.S. cies that the U.S. Treasury should be neutral can and cannot do, and many section Court of Appeals for the Tenth Circuit ex- in political affairs * * *.’’ H.R. Rep. No. 100– 501(c)(3) organizations have little difficulty plained, ‘‘[t]he limitations in Section 391, at 1625 (1987); see also S. Rep. No. 91–552, applying existing precedents to develop in- 501(c)(3) stem from the congressional policy at 46–49 (Tax Reform Act of 1969) (interpret- ternal guidelines for what activities are per- that the United States Treasury should be ing section 501(c)(3) to mean that ‘‘no degree missible and prohibited. For example, the Of- neutral in political affairs and that substan- of support for an individual’s candidacy for fice of General Counsel of the United States tial activities directed to attempts to * * * public office is permitted’’). Catholic Conference issued guidelines on po- affect a political campaign should not be The scope of the prohibition on political litical activities to Catholic organizations subsidized.’’ Christian Echoes National Min- campaign intervention has been the subject on February 14, 1996, in anticipation of the istry, Inc. v. United States, 470 F.2d 849, 854 of much discussion. While certain acts are 1996 election season.96 The guidelines outline (1972), cert. denied, 419 U.S. 1107 (1975) (empha- clearly proscribed, others may be permis- the parameters of permissible activity, in- sis in original). sible or prohibited, depending on the purpose cluding unbiased voter education, non- The prohibition on political campaign and effect of the activity. The regulations in- partisan get-out-the-vote drives, and non- intervention was added to the Internal Reve- terpreting the prohibition add little to the partisan public forums. They also describe nue Code as a floor amendment to the 1954 statutory definition: what activity is prohibited, including the en- Revenue Act offered by Senator Lyndon Activities which constitute participation dorsement of candidates, the distribution of Johnson, who believed that a section 501(c)(3) or intervention in a political campaign on campaign literature in support or opposition organization was being used to help finance behalf of or in opposition to a candidate in- to candidates, and the provision of financial the campaign of an opponent. In introducing clude, but are not limited to, the publication and in-kind support to candidates or PACs. the amendment, Senator Johnson said that or distribution of written or printed state- With respect to the latter, the guidelines it was to ‘‘deny[] tax-exempt status to not ments or the making of oral statements on state flatly that: only those people who influence legislation behalf of or in opposition to such a can- [A] Catholic organization may not provide but also to those who intervene in any politi- didate. financial support to any candidate, PAC, or cal campaign on behalf of any candidate for Treas. Reg. § 1.501(c)(3)–1(c)(3)(iii). Under this political party. Likewise, it may not provide any public office.’’ 100 Cong. Rec. 9604 (1954) provision, a section 501(c)(3) organization is or solicit in-kind support, such as free or se- (discussed in Bruce R. Hopkins, ‘‘The Law of prohibited from making a written or oral en- lective use of volunteers, paid staff, facili- Tax-Exempt Organizations,’’ 327 (6th ed. dorsement of a candidate and from distribut- ties, equipment, mailing lists, etc. 1992)). No congressional hearing was held on ing partisan campaign literature. IRS CPE ‘‘Political Activity Guidelines for Catholic the subject and the conference report did not Manual at 410. Following the enactment of Organizations’’ (United States Catholic Con- contain any analysis of the provision. Judith section 527 of the Code in 1974 (governing the ference, Office of the General Counsel, Wash- E. Kindell and John F. Reilly, ‘‘Election federal tax treatment of PACs), the prohibi- ington, D.C.), Feb. 14, 1996, reprinted in Paul Year Issues,’’ 1993 Exempt Organizations tion also prevents section 501(c)(3) organiza- Streckfus’ EO Tax Journal, November 1996 at Continuing Professional Education Tech- tions from establishing or supporting a PAC. 35, 42. nical Instruction Program 400, 401 (herein- IRS CPE Manual at 437. (The application of The generally accepted aspects of the cam- 94 after ‘‘IRS CPE Manual’’). the prohibition in this context is discussed paign intervention prohibition, as well as Although the prohibition on political cam- further below.) some areas of uncertainty, are discussed paign intervention was not formally added to It is clear, however, that section 501(c)(3) below. section 501(c)(3) until 1954, the concept that organizations also may violate the prohibi- (a) The Prohibition Is ‘‘Absolute’’ charities should not participate in political tion by engaging in activity that falls short campaigns was not new. As the Second Cir- The prohibition on political campaign of a direct endorsement, and even may—on intervention or participation is ‘‘absolute.’’ cuit noted, ‘‘[t]his provision merely ex- its face—appear neutral, if the purpose or ef- pressly stated what had always been under- IRS CPE Manual at 416. Unlike the prohibi- fect of the activity is to support or oppose a tion on lobbying, there is no requirement stood to be the law. Political campaigns did candidate. The IRS CPE Manual describes a not fit within any of the specified purposes that political campaign participation or variety of situations in which section intervention be substantial. New York Bar, listed in [Section 501(c)(3)].’’ The Association 501(c)(3) organizations may violate the prohi- of the Bar of the City of New York v. Commis- 858 F.2d at 881. It is, therefore, irrelevant bition without engaging in a direct can- that the majority, or even all but a small sioner, 858 F.2d 876, 879 (2d Cir. 1988) (herein- didate endorsement, including inviting a after ‘‘New York Bar’’) (quoting 9 Mertens, portion, of an organization’s activities particular candidate to make an appearance would, by themselves, support exemption Law of Federal Income Taxation § 34.05 at 22 at an organization event, holding candidate 95 under section 501(c)(3). United States v. (1983)). Furthermore, congressional con- forums or distributing voter guides which cerns that the government not subsidize po- Dykema, 666 F.2d 1096, 1101 (7th Cir. 1981); see evidence a bias for or against a candidate, also G.C.M. 39694 (Jan. 22, 1988) (‘‘An organi- litical activity have existed since at least and similar activities that may support or the time when Judge Learned Hand wrote zation described in section 501(c)(3) is pre- oppose a particular candidate. IRS CPE Man- cluded from engaging in any political cam- ‘‘[p]olitical agitation * * * however innocent ual at 419–424, 430–432. In a recent election the aim * * * must be conducted without paign activities’’) and P.L.R. 9609007 (Dec. 6, year news release, the IRS reminded 501(c)(3) 1995). (‘‘For purposes of section 501(c)(3), public subvention * * *.’’ Slee v. Commis- organizations of the breadth of the prohibi- sioner, 42 F.2d 184, 185 (2d Cir. 1930), quoted in intervention in a political campaign may be tion, stating not only that they cannot en- subtle or blatant. It may seem to be justified New York Bar, 858 F.2d at 879. dorse candidates or distribute statements in In 1987, Congress amended section 501(c)(3) by the press of events. It may even be inad- support of or opposition to candidates, but to clarify that the prohibition on political vertent. The law prohibits all forms of par- also that they cannot ‘‘become involved in campaign activity applied to activities in op- ticipation or intervention in ‘any’ political any other activities that may be beneficial 97 position to, as well as on behalf of, any can- campaign.’’) or detrimental to any candidate.’’ IRS News didate for public office. Omnibus Budget Release IR–96–23 (Apr. 24, 1996). 96 Reconciliation Act, Pub. L. No. 100–203, While it is easy for the IRS to determine Some churches assert that they have a First Amendment right to participate in political cam- § 10711, 101 Stat. 1330, 1330–464 (1987). The whether the prohibition on political cam- House Report accompanying the bill stated paign activities where doing so furthers their reli- paign intervention has been violated when a gious beliefs. However, courts have ruled that tax section 501(c)(3) organization endorses a can- exemption is a privilege and not a right, and that 94 The 1993 Exempt Organizations Continuing Pro- didate or distributes partisan campaign lit- section 501(c)(3) does not prohibit churches from par- fessional Education (CPE) Technical Instruction erature, it is more difficult to determine ticipating in political campaigns but merely pro- Program text was prepared by the IRS Exempt Orga- whether there is a violation if the activity at vides that they will not be entitled to tax exemption nizations Division for internal training purposes. issue is not blatant or serves a nonpolitical if they do so. See, e.g., Christian Echoes National Min- 95 Indeed, under the common law of charitable istry, Inc. v. United States, 470 F.2d 849 (10th Cir. 1972). trusts—the genesis of modern day section 501(c)(3)— purpose as well. The IRS relies on a ‘‘facts 97 See also G.C.M. 38137 (Oct. 22, 1979): [T]he prohi- it was recognized that ‘‘a trust to promote the suc- and circumstances’’ test in analyzing ambig- bition on political activity makes no reference to cess of a particular political party is not chari- uous behavior to determine whether there the intent of the organization. An organization can table,’’ for the reason that ‘‘there is no social inter- has been a violation. According to the IRS: violate the proscription even if it acts for reasons est in the underwriting of one or another of the po- [i]n situations where there is no explicit en- other than intervening in a political campaign. For litical parties.’’ Restatement (Second) of Trusts § 374 example, an organization that hires a political can- (1959). The continued importance of the common law dorsement or partisan activity, there is no didate to do commercials for its charity drive and doctrine of ‘‘charitability’’ to the standards for ex- bright-line test for determining if the IRC runs the commercials frequently during the political emption under section 501(c)(3) is reflected in the 501(c)(3) organization participated or inter- campaign may have no interest in supporting the Supreme Court decision in Bob Jones University v. vened in a political campaign. Instead, all candidate’s campaign. Nevertheless, its action United States, 461 U.S. 574 (1983), in which the Su- the facts and circumstances must be consid- would constitute, at least, indirect intervention or preme Court denied exemption to a private univer- ered. support of the political campaign. sity that practiced racial discrimination, on the However, the same G.C.M. goes on to say: ground that racial discrimination was contrary to IRS CPE Manual at 410. We do not mean to imply that every activity that public policy and therefore inconsistent with the Despite the lack of bright-line standards has an effect on a political campaign is prohibited common law standards for charitability. concerning all aspects of the prohibition, political activity. We recognize that organizations January 21, 1997 CONGRESSIONAL RECORD — HOUSE H229 Although the prohibition on political cam- Id. The IRS found that the organization vio- That is, it is not necessary to advocate the paign intervention under section 501(c)(3) is lated the political campaign intervention election or defeat of a clearly identified can- absolute, Congress recognized that the sanc- prohibition and imposed an excise tax on the didate to violate the prohibition. IRS CPE tion of loss of tax exemption could, in some organization under section 4955; it did not, Manual at 412–13. cases, be disproportionate to the violation. however, propose revocation of the organiza- Moreover, an organization may violate the In 1987, Congress added section 4955 to the tion’s exemption under section 501(c)(3). prohibition even if it does not identify a can- Code, which imposes excise tax penalties on (b) Section 501(c)(3) Organizations May Not didate by name. The IRS has stated that section 501(c)(3) organizations that make Establish or Support a PAC ‘‘issue advocacy’’ may serve as ‘‘the oppor- ‘‘political expenditures’’ in violation of the tunity to intervene in a political campaign Although organizations exempt from tax prohibition, as well as organization man- in a rather surreptitious manner’’ if a label under some categories of section 501(c) are agers who knowingly approve such expendi- or other coded language is used as a sub- tures. The legislative history provides that permitted to establish or support PACs,99 those exempt under section 501(c)(3) are not. stitute for a reference to identifiable can- the enactment of section 4955 was not in- didates. Id. at 411. tended to modify the absolute prohibition of When section 527 (governing the tax treat- section 501(c)(3), but to provide an alter- ment of PACs) was added to the Code in 1974, The concern is that an IRC 501(c)(3) organiza- native remedy that could be used by the IRS the legislative history provided that ‘‘this tion may support or oppose a particular can- in cases where the penalty of revocation provision is not intended to affect in any didate in a political campaign without spe- seems disproportionate to the violation: way the prohibition against certain exempt cifically naming the candidate by using code organizations (e.g., sec. 501(c)(3)) engaging in words to substitute for the candidate’s name i.e., where the expenditure was unintentional in its messages, such as ‘‘conservative,’’ ‘‘lib- and involved only a small amount and where ‘electioneering’ * * *’’ S. Rep. No. 93–1357 (1974), reprinted in 1975–1 C.B. 517, 534. The eral,’’ ‘‘pro-life,’’ ‘‘pro-choice,’’ ‘‘anti- the organization subsequently has adopted choice,’’ ‘‘Republican,’’ ‘‘Democrat,’’ etc., procedures to assure that similar expendi- regulations under section 527 reflect this coupled with a discussion of the candidacy or tures would not be made in the future. congressional intent: Section 527(f) and this section do not sanc- the election. When this occurs, it is quite H.R. Rep. No. 100–391, at 1623–24 (1987). tion the intervention in any political cam- evident what is happening—an intervention The legislative history also provides that paign by an organization described in section is taking place. the excise tax may be imposed in cases in- 501(c) if such activity is inconsistent with its Id. 411–412. Furthermore: volving significant, uncorrected violations of exempt status under section 501(c). For ex- [a] finding of political campaign interven- the prohibition, where revocation alone may tion from the use of coded words is consist- be ineffective because the organization has ample, an organization described in section ent with the concept of ‘‘candidate’’—the ceased operations after diverting its assets 501(c)(3) is precluded from engaging in any words are not tantamount to advocating sup- to an improper purpose. In these cases, the political campaign activities. The fact that port for or opposition to an entire political excise tax penalty on organization managers section 527 imposes a tax on the exempt may be the only effective way to penalize the function income (as defined in section 1.527– party, such as ‘‘Republican,’’ or a vague and violation. Id. at 1624–25. 2(c)) expenditures of section 501(c) organiza- unidentifiably large group of candidates, The IRS has shown an inclination to im- tions and permits such organizations to es- such as ‘‘conservative’’ because the sender of pose the excise tax under section 4955 in lieu tablish separate segregated funds to engage the message does not intend the recipient to of revocation of exemption in cases where in campaign activities does not sanction the interpret them that way. Code words, in this the violation appears to be minor in relation participation in these activities by section context, are used with the intent of conjur- to the organization’s other exempt purpose 501(c)(3) organizations. ing favorable or unfavorable images—they activities.98 For example, P.L.R. 9609007 (Dec. Treas. Reg. § 1.527–6(g). have pejorative or commendatory connota- 6, 1995) involved a section 501(c)(3) organiza- Since the enactment of section 527 in 1974, tions. tion that sent out a fundraising letter link- it has been clear that a section 501(c)(3) orga- Id. at 412 n. 6. ing the organization to issues raised in the nization will violate the prohibition on polit- (d) Educational Activities May Constitute particular campaigns. The IRS concluded ical campaign intervention by providing fi- Participation or Intervention that the letters evidenced a bias for one can- nancial or nonfinancial support for a PAC. As discussed above, the IRS considers ac- didate over the other. The organization IRS CPE Manual at 438–40. While the use of tivities that satisfy the ‘‘methodology test’’ sought to defend itself by saying only a few a section 501(c)(3)’s facilities, personnel, or of the letters were sent to the states whose to be ‘‘educational.’’ Just as educational ac- other financial resources for the benefit of a tivities may result in impermissible private elections were mentioned in the letters. The PAC is impermissible, the prohibition does IRS rejected this defense, stating that: benefit, however, so too may they violate the not stop there. In its CPE Manual, the IRS prohibition on political campaign interven- [I]t is common knowledge that in recent also noted that ‘‘[a]n IRC 501(c)(3) organization. The IRS takes the position that times the primary source of a candidate’s tion’s resources include intangible assets, ‘‘[a]ctivities that meet the methodology test support in such elections is often derived such as its goodwill, that may not be used to * * * may nevertheless constitute participa- from out-of-state sources. Although a par- support the political campaign activities of tion or intervention in a political cam- ticular reader may not have been eligible to another organization.’’ Id. at 440. Some lead- paign.’’ IRS CPE Manual at 415. actually vote for the described candidate, he ing practitioners have interpreted this provi- New York Bar, 858 F.2d 876 (2d Cir. 1988), re- or she could have been charged by [the orga- sion to prohibit a charity from allowing its ferred to above, is the leading case on point. nization], in our view, to participate in the name to be used by a PAC, even if the char- In that case, a bar association published rat- candidate’s campaign through direct mone- ity provides no financial support or assist- ings of judicial candidates. The ratings were tary or in-kind support, volunteerism, mold- ance; by allowing a PAC to use its name, the distributed to bar members and law libraries. ing of public opinion, or the like. charity implies to its employees and to the The Association also issued press releases republic that it endorses the activity of the garding its ratings, but did not conduct pub- may inadvertently support political candidates. In PAC. See Gregory L. Colvin et al., Com- licity campaigns to announce its ratings. Id. these instances the organizations have not ‘‘inter- mentary on Internal Revenue Service 1993 Ex- at 877. The Second Circuit held that al- vened’’ or ‘‘participated’’ in political campaigns. A empt Organizations Continuing Professional though the Association’s publications were hospital that provides emergency health care for a Education Technical Instruction Program Arti- educational, the distribution of the publica- candidate acts on behalf of the candidate during the cle on ‘‘Election Year Issues,’’ 11 Exempt Org. tions constituted prohibited campaign inter- election, but only inadvertently supports his cam- Tax Rev. 854, 871 (1995) [hereinafter ‘‘EO paign. vention. By disseminating the educational 98 Prior to the enactment of section 4955 in 1987, Comments’’]. publications with the hope that they would the IRS was reluctant to impose revocation in cases (c) ‘‘Express Advocacy’’ is Not Required, and ‘‘ ‘ensure’ that candidates whom [the Asso- where the violation was not blatant and the organi- Issue Advocacy is Prohibited if Used to ciation] consider[ed] to be ‘legally and pro- zation had a record of otherwise charitable activi- Convey Support for or Opposition to a fessionally unqualified’ ’’ would not be elect- ties. For example, P.L.R. 8936002 (May 24, 1989) in- Candidate ed, the court held that the Association ‘‘indi- volved a section 501(c)(3) organization that engaged in voter education and issue advocacy relating to An organization does not need to violate rectly’’ participated in a political campaign the 1984 Presidential election. Describing the case as the ‘‘express advocacy’’ standard applied on behalf of or in opposition to a candidate ‘‘a very close call,’’ the IRS ‘‘reluctantly’’ concluded under federal election law for it to violate for public office. Id. at 881. that the organization’s voter education activities the political campaign prohibition of section An implication of the holding in New York did not constitute prohibited political campaign 501(c)(3).100 T.A.M. 8936002 (May 24, 1989). Bar is that one must consider not only intervention, despite the use of ‘‘code words’’ that whether the activity itself, e.g., publishing could be viewed as evidencing support for a particular candidate. 99 For example, section 501(c)(4) and (6) organiza- The IRS appeared unwilling to seek revocation tions are permitted to establish and/or support to contributions ‘‘to reach only funds used for com- with respect to the organization, probably because PACs. If these exempt organizations provide support munications that expressly advocate the election or of its history of legitimate educational activities. for PACs, they are subject to tax, under section 527, defeat of a clearly identified candidate.’’ See IRS Had section 4955 been in effect when the activity on the lesser of their net investment income or their CPE Manual at 412 (quoting Buckley v. Valeo, 424 took place, the IRS would have had another enforce- ‘‘exempt function’’ income. U.S. 1, 77 (1976)). Examples of ‘‘express advocacy’’ in- ment alternative: it could have imposed excise tax 100 The FEC’s ‘‘express advocacy’’ standard came clude ‘‘vote for,’’ ‘‘elect,’’ and ‘‘Smith for Congress’’ penalties on the organization’s expenditures for the into being because the Supreme Court held a provi- or ‘‘vote against,’’ ‘‘defeat,’’ and ‘‘reject.’’ Id. at 413 activities it found so troublesome. sion of the Federal Elections Campaign act relating (referring to 11 C.F.R. § 109.1(b)(2)). H230 CONGRESSIONAL RECORD — HOUSE January 21, 1997 educational materials such as candidate rat- theless held that they constituted participa- * * * Intervention at this early stage in the ings, violates the political campaign prohibition in a political campaign. As noted by the elective process in order to influence politi- tion, but also whether the intended con- IRS in its CPE Manual, the court in New cal parties to nominate such candidates is, sequences of the activity violates the prohi- York Bar ‘‘made the rather wry observation we believe, sufficient to constitute interven- bition.101 The need to consider the con- [that] [a] candidate who receives a ‘not tion in a political campaign. sequences of an otherwise educational activ- qualified’ rating will derive little comfort Id. The IRS went on to say: ity is clear from a review of several IRS rul- from the fact that the rating may have been ings finding that an organization violated made in a nonpartisan manner.’’ IRS CPE In its discussion of the Tax Court opinion [in the prohibition by disseminating material Manual at 416. Similarly, in G.C.M. 35902 New York Bar], the [Second Circuit] observed that was deemed educational, but nonethe- (July 15, 1974), the IRS stated: that the ratings of candidates were ‘‘pub- less affected voter preferences in violation of lished with the hope that they will have an The provision in the Code prohibiting par- impact on the voter.’’ The effort, and not the the prohibition. ticipation or intervention in ‘‘any political For example, in Rev. Rul. 67–71, 1967–1 C.B. effect, constituted intervention in a political campaign’’ might conceivably be interpreted campaign. Therefore, whether anyone heeded 125, the IRS ruled that a 501(c)(3) organiza- to refer only to participation or intervention tion created to improve the public edu- the call to run for precinct committee, with a partisan motive; but the provision whether that individual was elected, and if cational system by engaging in campaigns does not say this. It seems more reasonable on behalf of candidates for school board was so, what he or she subsequently did are all to construe it as referring to any statements immaterial. not exempt. Every four years, when the made in direct relation to a political cam- school board was to be elected, the organiza- Id. paign which affect voter acceptance or rejec- In G.C.M. 39811, the IRS did not contend tion considered the qualification of the can- tion of a candidate * * * didates and selected those it thought most that the organization’s urging of members to qualified. The organization then ‘‘engage[d] (f) The IRS Has Found Violations of the Pro- run for office alone constituted the viola- in a campaign on their behalf by publicly an- hibition on Political Campaign Participa- tion. Rather, the organization’s ‘‘long-term nouncing its slate of candidates and by pub- tion When an Activity Could Affect or strategy’’ of seeking to influence the politi- lishing and distributing a complete biog- Was Intended to Affect Voters’ Pref- cal parties’ nomination of candidates by hav- raphy of each.’’ Id. Although the selection erences ing its members elected to office, and its process ‘‘may have been completely objec- As discussed above, the courts and the IRS urging of members to run for office so as to tive and unbiased and was intended pri- have found prohibited political campaign carry out that strategy, were sufficient to marily to educate and inform the public intervention when the activity in question, support a finding of impermissible campaign about the candidates,’’ the IRS nonetheless although educational, affected or could rea- participation, despite the fact that the effort ruled it to be intervention or participation sonably be expected to affect voter pref- was not successful. in a political campaign. Id. erences, even where the organization’s mo- Other cases and rulings have also looked to In Rev. Rul. 76–456, 1976–2 C.B. 151, the IRS tives in undertaking the activity were non- an organization’s intent as an important ele- ruled that an organization formed for the partisan. G.C.M. 35902 is to similar effect. In ment of a finding of prohibited participation purpose of elevating the morals and ethics of that case, the IRS held that a public broad- or intervention. In 1972, a court held that an political campaigning was nevertheless in- casting station’s nonpartisan educational organization violated the participation or tervening in a political campaign when it so- motivation was irrelevant in determining intervention prohibition when it ‘‘used its licited candidates to sign a code of fair cam- whether its provision of free air time to can- publications and broadcasts to attack can- paign practices and released the names of didates for elective office was permissible didates and incumbents who were considered those candidates who signed and those can- under section 501(c)(3). The IRS found that too liberal.’’ Christian Echoes National Min- didates who refused to sign. The IRS stated the station’s procedures for providing air istry, Inc. v. United States, 470 F.2d 849, 856 that this was done to educate citizens about time, including an equal time doctrine for (10th Cir. 1972). The court did not discuss the election process and so that they could all candidates and an on-air disclaimer of whether the activities actually influenced ‘‘participate more effectively in their selec- support for any particular candidate, were voters or were reasonably likely to do so. tion of government officials.’’ Id. at 152. sufficient to ensure that the activity would Rather, it concluded that the organization’s Nonetheless, such activity, although edu- not constitute an impermissible political ‘‘attempts to elect or defeat certain political cational, ‘‘may result * * * in influencing campaign intervention. The fact that the leaders reflected [the organization’s] objec- voter opinion’’ and thus constituted a pro- station’s motivation was to educate the pub- tive to change the composition of the federal hibited participation or intervention in a po- lic and not to influence an election, however, government.’’ Id. litical campaign. Id. was deemed to be irrelevant. The IRS also found an organization’s in- The cases and rulings cited above make it tent relevant in P.L.R. 9117001 (Sept. 5, 1990). (e) Nonpartisan Activities May Constitute clear that simply having an educational or As described in that ruling, an organization Prohibited Political Campaign Participa- nonpartisan motive for engaging in prohib- mailed out material indicating that it was tion ited political activity is not a defense to a intending to help educate conservatives on The IRS takes the position that the non- finding of violation. The relevance and irrel- the importance of voting in the 1984 general partisan motivation for an organization’s ac- evance of motive is sometimes misstated, election. According to facts stated in the rul- tivities is ‘‘irrelevant when determining however. While the absence of an improper ing letter, the material contained language whether the political campaign prohibition’’ political motivation is irrelevant, evidence ‘‘intended’’ to induce conservative voters to has been violated. IRS CPE Manual at 415. showing the existence of a political motiva- vote for President Reagan, even though his As support for this position, the IRS cites tion is relevant and one of the facts and cir- name was not included in the materials. The Rev. Rul. 76–456 and New York Bar, both of cumstances that the IRS will consider in de- IRS thus concluded that ‘‘the material was which are discussed above. In those cases, termining whether there is a violation. In- targeted to influence a segment of voters to the court or the IRS found that the activi- deed, the IRS has found the existence of evi- vote for President Reagan.’’ Id. ties in question were nonpartisan, but never- dence showing an intent to participate in a Based on the above, the IRS position is political campaign to be sufficient to sup- that an organization can violate the political 101 See also T.A.M. 9635003 (Apr. 19, 1996). T.A.M. port a finding of violation, despite the lack campaign prohibition by either: (a) conduct- 9635003 involved a section 501(c)(3) organization that of evidence that the activity achieved the in- ing activities that could have the effect of conducted ‘‘citizens’ juries,’’ a form of voter edu- tended results. influencing voter acceptance or rejection of cation in which a cross-section of citizens are se- For example, in G.C.M. 39811 (Feb. 9, 1990), a candidate or group of candidates (the ‘‘ef- lected to determine which issues are most relevant a religious organization encouraged its mem- fect’’ standard), or (b) engaging in activities in the context of a particular campaign, to hear bers to seek election to positions as precinct that are intended to influence voter accept- presentations by candidates on those issues, and to committee-persons in the Republican or rate the candidates’ positions on the issues. The sec- ance or rejection of a candidate or group of tion 501(c)(3) organization disseminated the citizen Democratic Party structures. Although none candidates, whether they do so or not (the jury’s report, including the candidate ratings. In its of the organization’s members actually ran ‘‘effort’’ standard). Most of the uncertainty dissemination, the organization made it clear that for such positions, the IRS found that urging over the scope of the prohibition on political it did not support or oppose any candidate, and that its members to become involved in the local campaign intervention relates to the ‘‘ef- the views expressed were those of the citizen jurors party organizations was part of the organiza- fect’’ standard—the possibility that an orga- and not the organization. The IRS found that the tion’s larger plans to ‘‘someday control the nization may, without intending to do so, en- dissemination of the report constituted impermis- political parties.’’ sible participation in a political campaign, and that gage in an activity that could have the effect all expenditures in connection with the conduct of The first step in the Foundation’s long-term of influencing voter acceptance of a can- the citizens’ jury—and not just the expenditures of strategy was to encourage members to be didate and, as a result, place its tax exemp- the dissemination—constituted ‘‘political expendi- elected as precinct committeemen. These in- tion in jeopardy and/or risk incurring excise tures’’ under section 4955: This culmination shows dividuals could then exert influence within tax penalties under section 4955. The legisla- that all the activity of the organization leading up the party apparatus, beginning with the tive history of section 4955 makes it clear to the final report is intimately connected with and a part of the process to put on the [citizens’ jury], county central committee. Precinct com- that an inadvertent action may indeed vio- and thus publication of the final report makes the mitteemen could sway the precinct caucuses, late section 501(c)(3), and suggests that the entire process with respect to the [citizens’ jury] a a step in the selection of delegates to the IRS may appropriately apply the excise tax proscribed political activity. party’s presidential nominating convention. penalty rather than revocation as a sanction January 21, 1997 CONGRESSIONAL RECORD — HOUSE H231 in such situations. Nevertheless, some prac- substantiality. One test is referred to as the opposing legislation (Treas. Reg. § 1.501(c)(3)– titioners have expressed the view that, in in- ‘‘substantial-part test.’’ The other test, re- 1(c)(3)(ii)(a)) (referred to as ‘‘direct lobby- terpreting whether ambiguous behavior is ferred to as the ‘‘expenditure test,’’ 102 was ing’’); violative of the campaign intervention pro- added to tax law in 1976 at sections 501(h) and (b) urges the public to contact members of hibition, primary reliance should be placed 4911 as a result of uncertainty over the a legislative body for the purpose of propos- on whether there was a political purpose to meaning of the word ‘‘substantial.’’ ing, supporting, or opposing legislation (id.) the behavior at issue. See EO Comments at The ‘‘expenditure test’’ sets forth specific, (referred to as ‘‘grassroots lobbying’’); or 856–57. In other words, ‘‘to violate the dollar levels of permissible lobbying expendi- (c) advocates the adoption or rejection of 501(c)(3) prohibition, the organization’s ac- tures. Section 501(h) did not amend section legislation (Treas. Reg. § 1.501(c)(3)– tions have to include an intentional ’tilt’ for 501(c)(3), but rather provided charitable orga- 1(c)(3)(ii)(b)). nizations an alternative to the vague ‘‘sub- or against one or more people running for Section 4945(e) of the Internal Revenue Code stantial-part’’ limitations of section public office.’’ Id. at 857. In this regard, it provides additional guidance regarding the 501(c)(3). A charitable organization may elect was noted that: meaning of ‘‘attempting to influence legisla- the ‘‘expenditure test’’ as a substitute for In most cases, the presence of a political pur- tion.’’ 103 According to that provision, a tax- the substantial-part test. A public charity able expenditure includes any amount paid pose will be clear from the charity’s paper that does not elect the expenditure test re- or incurred for: trail, because organizational activities in mains subject to the substantial part test. the political arena are usually accompanied Treas. Reg. § 1.501(h)–1(a)(4). Joint Commit- (a) any attempt to influence any legisla- by assertive behavior, much internal discus- tee in its General Explanation of the Tax Re- tion through an attempt to affect the opin- sion, and explicit written communications. form Act of 1976, 1976–3 C.B. (Vol. 2) 419. ion of the general public or any segment *** The substantial-part test is applied with- thereof, and Id. out regard to the provisions of section 501(h). (b) any attempt to influence legislation To date, the IRS has shown no intention to The law, regulations and rulings regarding through communication with any member or abandon its position that an organization the expenditure test may not be used to in- employee of a legislative body, or with any may violate the prohibition against political terpret the law, regulations and rulings of other government official or employee who campaign intervention based on the unin- the substantial-part test. Section 501(h)(7) may participate in the formulation of the tended or inadvertent effect of its actions, as (‘‘nothing [in section 501(h)] shall be con- legislation (except technical advice or assist- well as by an engaging in activities with ‘‘an strued to affect the interpretation of the ance provided to a government body or to a intentional tilt’’ in favor of a candidate or in phrase ‘no substantial part of the activities committee or other subdivision thereof in re- support of a PAC. Indeed, its recent election of which is carrying on propaganda, or other- sponse to a written request by such body or year warning to section 501(c)(3) organiza- wise attempting, to influence legislation,’ subdivision . * * *) other than through mak- tions not to ‘‘become involved in any other under [section 501(c)(3)]’’). ing available the results of nonpartisan anal- activities that may be beneficial or det- Determining whether an organization vio- ysis, study, or research. rimental to any candidate’’ (discussed above) lated the lobbying limitation requires an un- Treas. Reg. § 53.4945–2(d)(4), which is applica- evidences an apparent intention to adhere to derstanding of what constitutes: i. ‘‘legisla- ble to non-electing public charities,104 dis- a broad interpretation of the prohibition. tion;’’ ii. an attempt to ‘‘influence’’ legisla- cusses ‘‘nonpartisan analysis, study, or re- IRS News Release IR–96–23 (Apr. 24, 1996). tion; and iii. a ‘‘substantial’’ part of an orga- search’’ as follows: nization’s activities. It is also necessary to (ii) If a Substantial Part of an Organization’s Examinations and discussions of broad so- understand the circumstances under which Activities is Attempting to Influence Legis- cial, economic, and similar problems are [not an organization’s ‘‘objectives can be lation, or its Primary Goal can only be Ac- lobbying communications] even if the prob- achieved only through the passage of legisla- lems are of the type with which government complished through Legislation, it is an tion.’’ ‘‘Action’’ Organization would be expected to deal ultimately * * * (a) Definition of ‘‘Legislation’’ For example, [an organization may discuss] Section 501(c)(3) provides that an organiza- problems such as environmental pollution or tion cannot be tax-exempt if a ‘‘substantial The Regulations define ‘‘legislation’’ to include ‘‘action by the Congress, by any State population growth that are being considered part’’ of its activities is ‘‘carrying on propa- by Congress and various State legislatures, ganda, or otherwise attempting, to influence legislature, by any local council or similar governing body, or by the public in a referen- but only where the discussions are not di- legislation.’’ Although there is virtually no rectly addressed to specific legislation being legislative history on the prohibition, courts dum, initiative, constitutional amendment, or similar procedure.’’ Treas. Reg. § 501(c)(3)– considered, and only where the discussions have declared that the limitations in section 1(c)(3)(ii). ‘‘Action by the Congress’’ includes do not directly encourage recipients of the 501(c)(3) ‘‘stem from the policy that the Unit- the ‘‘introduction, amendment, enactment, communication to contact a legislator, an ed States Treasury should be neutral in po- defeat, or repeal of Acts, bills, resolutions, or employee of a legislative body, or a govern- litical affairs and that substantial activities similar items.’’ G.C.M. 39694 (Jan. 22, 1988). ment official or employee who may partici- directed to attempts to influence legislation This definition does not include Executive pate in the formulation of legislation.105 should not be subsidized.’’ Haswell v. United Branch actions, or actions of independent Even if specific legislation is not men- States, 500 F.2d 1133, 1140 (Ct. Cl. 1974), cert. agencies. P.L.R. 6205116290A (May 11, 1962). tioned, however, an indirect campaign to denied, 419 U.S. 1107 (1975). (The court also Requesting executive bodies to support or ‘‘mold public opinion’’ may violate the legis- noted that ‘‘[t]ax exemptions are matters of oppose legislation, however, is prohibited. lative lobbying prohibition. In Christian legislative grace and taxpayers have the bur- The IRS does not recognize a distinction be- Echoes National Ministry, Inc. v. United States, den of establishing their entitlement to ex- tween ‘‘good’’ legislation and ‘‘bad’’ legisla- 470 F.2d 849 (10th Cir. 1972), the organization emptions.’’ Id.) tion. For example, in Rev. Rul. 67–293, 1967– in question produced religious radio and tel- The Regulations provide that an organiza- 2 C.B. 185, the IRS ruled that an organization evision broadcasts, distributed publications, tion is an ‘‘action’’ organization if ‘‘a sub- substantially engaged in promoting legisla- and engaged ‘‘in evangelistic campaigns and stantial part of its activities is attempting tion to protect animals was not exempt even meetings for the promotion of the social and to influence legislation by propaganda or though the legislation would have benefited spiritual welfare of the community, state otherwise.’’ Treas. Reg. § 1.501(c)(3)– the community. and nation.’’ Id. at 852. The court found the 1(c)(3)(ii). The Regulations also provide that (b) Definition of ‘‘attempting to influence leg- publications attempted to influence legisla- an organization is an ‘‘action’’ organization tion ‘‘by appeals to the public to react to if it has the following two characteristics: islation’’ certain issues.’’ Id. at 855.106 (a) Its main or primary objective or objec- Under the Regulations, an organization tives (as distinguished from its incidental or will be regarded as ‘‘attempting to influence secondary objective) may be attained only legislation’’ if it: 103 I.R.C. §§ 4945(d) and (e) contain definitions of by legislation or a defeat of proposed legisla- (a) contacts members of a legislative body ‘‘attempting to influence legislation’’ with respect for the purpose of proposing, supporting, or to taxable expenditures by private foundations, not tion; and public charities. However, ‘‘[a]ctivities which con- (b) it advocates, or campaigns for, the at- stitute an attempt to influence legislation under tainment of such main or primary objective 102 As stated in the legislative history with respect Code § 4945 * * * also constitute an attempt to influ- or objectives as distinguished from engaging to I.R.C. § 501(h): ‘‘The language of the lobbying pro- ence legislation under Code § 501(c)(3).’’ G.C.M. 36127 in nonpartisan analysis, study, or research vision was first enacted in 1934. Since that time nei- (Jan. 2, 1975). Congress viewed section 4945(e) as a and making the results thereof available to ther Treasury regulations nor court decisions gave clarification of the phrase ‘‘attempting to influence the public. enough detailed meaning to the statutory language legislation’’ in tax-exempt law generally, not just to permit most charitable organizations to know ap- with respect to private foundations. Id. Treas. Reg. § 1.501(c)(3)–1(c)(3)(iv). proximately where the limits were between what 104 See G.C.M. 36127 (Jan. 2, 1975) and Haswell v. To determine whether a substantial part of was permitted by the statute and what was forbid- United States, 500 F.2d 1133 (Ct. Cl. 1974). an organization’s activities is attempting to den by it. This vagueness was, in large part, a func- 105 See also G.C.M. 36127 (Jan. 2, 1975). influence legislation, two alternative tests tion of the uncertainty in the meaning of the terms 106 For example, the publications urged its readers ‘substantial part’ and ‘activities’. * * * Many be- to: ‘‘write their Congressmen in order to influence exist. Each test contains its own definition lieved that the standards as to the permissible level the political decisions in Washington;’’ ‘‘work in of ‘‘legislation’’ and what constitutes an at- of activities under prior law was too vague and politics at the precinct level;’’ ‘‘maintain the tempt to influence legislation. The two tests thereby tended to encourage subjective and selective McCarran-Walter Immigration law;’’ ‘‘reduce the also contain different ways of determining enforcement.’’ Continued H232 CONGRESSIONAL RECORD — HOUSE January 21, 1997 Under the expenditure test, ‘‘grassroots can be achieved only through the passage of d. To Satisfy the Operational Test, an Organi- lobbying’’ is ‘‘any attempt to influence legis- legislation that ‘‘all the surrounding facts zation Must Not Violate the ‘‘Private lation through an attempt to affect the opin- and circumstances, including the articles Inurement’’ Prohibition ions of the general public or any segment and all activities of the organization, are to To qualify for tax-exempt status, section thereof.’’ Treas. Reg. § 56.4911–2(b)(2)(i). Such be considered.’’ Treas. Reg. § 1.501(c)(3)– 501(c)(3) provides that an organization must a communication will be considered grass- 1(c)(3)(iv). There is little additional IRS or be organized and operated so that ‘‘no part of roots lobbying if it: (a) refers to specific leg- court guidance on the subject. In one of the [its] net earnings * * * inures to the benefit islation, (b) reflects a view on such legisla- few comments on this section of the Regula- of any private shareholder or individual.’’ tion, (c) [e]ncourages the recipient to take tions, the IRS said in G.C.M. 33617 (Sep. 12, The Regulations add little clarification to action with respect to such legislation. 1967) that an organization that was ‘‘an ac- this provision other than saying that ‘‘[a]n Treas Reg. § 56.4911–2(b)(2)(ii).107 tive advocate of a political doctrine’’ was an organization is not operated exclusively for (c) Definition of ‘‘Substantial’’ action organization because its objectives one or more exempt purposes if its net earn- A bright-line test for determining when a could only be attained by legislation. In its ings inure in whole or in part to the benefit ‘‘substantial’’ part of an organization’s ac- publications, the organization stated that its of private shareholders or individuals.’’ tivities are devoted to influencing legisla- objectives included: Treas. Reg. § 1.501(c)(3)–1(c)(2). Although the private benefit and private tion does not exist. Neither the regulations the mobilization of public opinion; resisting nor case law provide useful guidance as to every attempt by law or the administration inurement prohibitions share common and whether the determination must be based on of law which widens the breach in the wall of often overlapping elements, the two are dis- activity or expenditures or both. In [redacted by IRS] working for repeal of any tinct requirements which must be independ- Seasongood v. Commissioner, 227 F.2d 907 (6th existing state law which sanctions the grant- ently satisfied. American Campaign Academy, Cir. 1955), the court held that attempts to in- ing of public aid to [redacted by IRS]; and 92 T.C. at 1068. The private inurement prohi- fluence legislation that constituted less than uniting all ‘patriotic’ citizens in a concerted bition may be ‘‘subsumed’’ within the pri- five percent of total activities were not sub- effort to prevent the passage of any federal vate benefit analysis, but the reverse is not stantial. The percentage test of Seasongood law [redacted by IRS]. * * *’’ true. ‘‘[W]hen the Court concludes that no was, however, explicitly rejected in Christian By advocating its position to others, thereby prohibited inurement of earnings exists, it Echoes National Ministry, Inc. attempting to secure general acceptance of cannot stop there but must inquire further The political [i.e. legislative] activities of its beliefs; by engaging in general legislative and determine whether a prohibited private an organization must be balanced in the con- activities to implement its views; by urging benefit is conferred.’’ Id. at 1069. It should be text of the objects and circumstances of the the enactment or defeat of proposed legisla- noted that the private inurement prohibition organization to determine whether a sub- tion which was inimical to its principles: the pertains to net earnings of an organization, stantial part of its activities was to influ- organization ceased to function exclusively while the private benefit prohibition can ence legislation. (citations omitted.) A per- in the educator’s role of informant in that apply to benefits other than those that have centage test to determine whether the ac- its advocacy was not merely to increase the monetary value. Furthermore, unlike with tivities were substantial obscures the com- knowledge of the organization’s audience, the private benefit prohibition, the prohibi- plexity of balancing the organization’s ac- but was to secure acceptance of, and action tion on private inurement is absolute. tivities in relation to its objects and cir- on, the organization’s views concerning leg- ‘‘There is no de minimis exception to the cumstances. islative proposals, thereby encroaching upon inurement prohibition.’’ G.C.M. 39862 (Nov. Id. at 855. Yet in Haswell v. United States, 500 the proscribed legislative area. 22, 1991). The IRS has described ‘‘private sharehold- F.2d 1133, 1145 (Ct. Cl. 1974), the court deter- In Rev. Rul. 62–71, 1962–1 C.B. 85, an organi- mined that while a percentage test is not the ers or individuals’’ as ‘‘persons who, because zation was formed ‘‘for the purpose of sup- only measure of substantiality, it was a of their particular relationship with an orga- porting an educational program for the stim- strong indication that the organization’s nization, have an opportunity to control or ulation of interest in the study of the science purposes were no longer consistent with influence its activities.’’ Id. ‘‘[I]t is generally of economics or political economy, particu- charity. In that case, the court concluded accepted that persons other than employees that approximately 20 percent of the organi- larly with reference to a specified doctrine or directors may be in a position to exercise zation’s total expenditures were attributable or theory.’’ It conducted research, made sur- the control over an organization to make to attempts to influence legislation, and veys on economic conditions available, mod- that person an insider for inurement pur- they were found to be substantial. Id. at 1146. erated discussion groups and published books poses.’’ Hill, F. and Kirschten, B., Federal The IRS has characterized the ambiguity and pamphlets. The research activities were and State Taxation of Exempt Organizations 2– over the meaning of ‘‘substantial’’ as a principally concerned with determining the 85 (1994). ‘‘The inurement prohibition serves ‘‘problem [that] does not lend itself to ready effect various real estate taxation methods to prevent anyone in a position to do so from numerical boundaries.’’ G.C.M. 36148 (Janu- would have on land values with reference to siphoning off any of a charity’s income or as- ary 28, 1975). In attempting to give some the ‘‘single tax theory of taxation.’’ ‘‘It [was] sets for personal use.’’ G.C.M. 39862 (Nov. 22, guidance on the subject, however, the IRS the announced policy of the organization to 1991). Furthermore, the IRS has stated that: promote its philosophy by educational meth- said: [I]nurement is likely to arise where the fi- ods as well as by the encouragement of polit- [t]he percentage of the budget dedicated to a nancial benefit represents a transfer of the ical action.’’ Id. The tax theory advocated in given activity is only one type of evidence of organization’s financial resources to an indi- the publications, although educational with- substantiality. Others are the amount of vol- vidual solely by virtue of the individual’s rein the meaning of section 501(c)(3), could be unteer time devoted to the activity, the lationship with the organization, and with- put into effect only by legislative action. amount of publicity the organization assigns out regard to accomplishing exempt pur- Without further elaboration of the facts in- to the activity, and the continuous or inter- poses. volved or how the theory could only be put mittent nature of the organization’s atten- G.C.M. 38459 (July 31, 1980). Also IRS Exempt tion to it. into effect through legislative action, the IRS ruled the organization was an action or- Organizations Handbook (IRM 7751) § 381.1(4) (d) Circumstances under which an organiza- ganization, and thus not operated exclu- (‘‘The prohibition of inurement in its sim- tion’s ‘‘objectives can be achieved only sively for an exempt purpose. plest terms, means that a private share- through the passage of legislation’’ holder or individual cannot pocket the orga- In G.C.M. 37247 (Sept. 8, 1977), the IRS dis- nization’s funds except as reasonable pay- The Regulations require that when deter- cussed whether a organization whose guiding ment for goods or services’’); and Hopkins, mining whether an organization’s objectives doctrine was to propagate a ‘‘nontheistic, supra, at 267 (Proscribed private inurement ethical doctrine’’ of volunteerism could be ‘‘involves a transaction or series of trans- federal payroll by discharging needless jobholders, considered a 501(c)(3) organization. The ‘‘ul- actions, such as unreasonable compensation, stop waste of public funds and balance the budget;’’ timate goal’’ of the guiding doctrine was unreasonable rental charges, unreasonable ‘‘stop federal aid to education, socialized medicine ‘‘freedom from governmental and societal borrowing arrangements, or deferred or re- and public housing;’’ ‘‘abolish the federal income control.’’ According to the IRS: tax;’’ and ‘‘withdraw from the United Nations.’’ tained interests in the organization’s as- Christian Echoes National Ministry, 470 F.2d at 855. In [t]his objective can obviously only be at- sets’’). light of these facts, the court upheld the IRS posi- tained legally through legislation, including Mr. TAYLOR of Mississippi. Mr. Speaker, tion that the organization failed to qualify as a constitutional amendments, or illegally today I rise to discuss the ethics charges fac- 501(c)(3) organization. through revolution. If [the organization] 107 The IRS has also concluded that an organiza- should advocate illegal activities, then it is ing NEWT GINGRICH, Speaker of the House of tion formed to ‘‘facilitate’’ the inauguration of a not charitable; if it advocates legal attain- Representatives. state’s governor-elect and the ‘‘orderly transition of The House Ethics Committee voted 7±1 to power from one political party to another by legisla- ment of its doctrine’s goal through legislative and personnel studies’’ violated the prohibition tion, then it is an action organization. reprimand and assess a penalty of $300,000 on attempting to influence legislation. G.C.M. 35473 The IRS did not conclude that organization for Speaker GINGRICH. (Sept. 10, 1973). The IRS ‘‘saw no logical way to was an action organization, only that there In recommending a sanction and a avoid concluding that [the organization’s] active ad- $300,000 fine, the committee stated on page vocacy of a proposed legislative program requires it was such a possibility and further investiga- to be [classified as an action organization. * * *]’’ tion was warranted. Research has not uncov- 94 of its report the following: ``* * * the viola- See also Rev. Rul. 74–117, 1974–1 C.B. 128. ered further information about this case. tion does not represent only a single instance January 21, 1997 CONGRESSIONAL RECORD — HOUSE H233 of reckless conduct. Rather, over a number of submissions to verify their accuracy. Mr. GING- gible for tax-exempt status because it served years and in a number of situations, Mr. GING- RICH's failure to set the record straight at this private, rather than public interests. RICH showed a disregard and lack of respect point was under the most charitable view But Mr. GINGRICH was not deterred by the for the standards of conduct that applied to his grossly reckless. lessons of the American Campaign Academy activities.'' The committee was also justified in conclud- ruling. Far from it. Instead, over a million dol- Based on this, I find it inconceivable that the ing that Mr. GINGRICH erred in failing to consult lars was diverted knowingly and improperly Ethics Committee would recommend a resolu- a tax attorney regarding certain of his activities from charities for political purposes in violation tion to this body which would not specifically involving organizations exempt from taxation of the law and of House ethical rules. As re- prohibit the Speaker from paying his fine from under section 501(c)(3) of the Internal Reve- vealed with great clarity by Mr. Cole, Mr. campaign funds. Mr. GINGRICH's campaign or- nue Code. Although legal experts may dis- GINGRICH engaged in a deliberate strategy to ganization can raise these funds in a matter of agree about the propriety of Mr. GINGRICH's use money contributed for charitable purposes minutes. During the Speaker's most recent conduct, Mr. GINGRICH's own expert witness to fund his own partisan agenda. general election campaign, he spent $5.4 mil- acknowledged that the combination of politics And it is impossible to read the Cole report lion to defeat his challenger. At the end of No- and 501(c)(3) organizations is an `èxplosive without also understanding Mr. GINGRICH's use vember, Federal Election Commission reports mix,'' and stated that he would have advised of the enhanced power and prestige of the indicate that he has over $1 million remaining Mr. GINGRICH not to use 501(c)(3) entities for Speakership for personal enrichment. The evi- in his campaign fund. the purposes for which he used them. There dence goes far beyond the salary and per- The Speaker used funds from tax-exempt was more than an adequate basis for the quisites of the Speakership. A telling example organizations to promote his political agenda. committee to conclude that ``there were signifi- is Mr. GINGRICH's acceptance of a $4.3 million If a Member violates the rules of the House, cant and substantial warning signals to Mr. book advance, which flowed directly from his the Member, not their campaign, should be GINGRICH that he should have heeded prior to new position and the materials from what we held responsible for whatever fine is levied. embarking on ``the projects involving tax-ex- now know was a taxpayer sponsored college Mr. Speaker, I therefore voted against ap- empt entities. In 1995 Mr. GINGRICH himself course. Although Mr. GINGRICH was eventually proving the resolution recommended by the told the New York Times that his activity in- forced to give up the advance, he has col- committee. volving section 501(c)(3) entities ``[g]oes right lected royalties far in excess of any money in- Mr. CANADY of Florida. Mr. Speaker, today up to the edge. * * * [I]t's risk taking.'' Such volved in the case of former Speaker Jim I cast my vote in support of the recommenda- comments betray a disturbing lack of concern Wright. Ultimately, this episode is about the failure tion of the Committee on Standards of Official by Mr. GINGRICH about the prospect that his to be honest. Nothing speaks more eloquently Conduct that Mr. GINGRICH be reprimanded conduct might bring discredit on the House. and subjected to a $300,000 cost assessment. In light of all these circumstances, I believe to that point than Mr. GINGRICH's final and be- I do so after reviewing the report of the com- that the penalty recommended by the commit- lated admission, not to guilt, but only to being naive. Everyone who reads the Cole report, mittee and the report of counsel for Mr. GING- tee represents the minimum appropriate sanc- and, I submit, anyone who carefully observes RICH. tion. Even if he did not intend to mislead the Mr. GINGRICH's personal behavior during these In making a judgment regarding this matter, committee or abuse the tax laws, Mr. GING- last few days, knows how hollow this rings. I have been guided by the dual goals of main- RICH's conduct was culpable because it was Mr. GINGRICH is not naive. He has devoted a taining the integrity of the House, and ensur- reckless. Such conduct undermines public quarter of a century in pursuit of political ing that Mr. GINGRICH be treated fairly. I have confidence in the integrity of our system of power for himself and his party. It has been at attempted to base my decision on this matter Government. It is conduct that cannot be ex- times brilliant, calculating, and shrewd. But it on all the relevant facts. In my view, the com- cused. The reprimand combined with the stiff has never been naive. Mr. GINGRICH pushed mittee was well justified in concluding that Mr. cost assessment sends a strong signal that the envelop, and got caught. GINGRICH engaged in conduct which did not the House will deal firmly with such trans- Mr. PACKARD. Mr. Speaker, honesty, fair- reflect creditably on the House. gressions of the rules of the House. ness, and dealing justly with others has been The most serious finding against Mr. GING- Mr. BLUMENAUER. Mr. Speaker, for me, an overriding principle of my entire life. The RICH involves the submission of inaccurate in- the GINGRICH episode represents much of Speaker admitted he made mistakes. I believe formation to the committee. The cir- what is wrong about the American political this body should admonish the Speaker's ac- cumstances surrounding the submission of in- system today. It is unfortunately a failing which tions. However, the Ethics Committee's rec- correct statements indicates that Mr. GINGRICH occurs on many levels. ommendations go much too far. The penalty was woefully remiss in meeting his obligation At its core is the behavior of the man twice far exceeds the infraction. as a respondent in the ethics process. Al- removed from the Presidency. It is very dif- First and foremost, the Ethics Committee though the committee did not conclude that ficult for anyone who has read the Cole report serves to ensure fairness. With that in mind, Mr. GINGRICH intentionally misled the commit- to reach any conclusion other than that Mr. the Committee must level equitable sanctions. tee, it is clear that at the least Mr. GINGRICH GINGRICH consistently did not tell the truth, in This recommendation fails to do so. was reckless in responding to a series of in- a desperate attempt to avoid responsibility for In the past, the Committee chose to dis- quiries from the committee. the misuse of taxpayer funds for partisan gain. pense with similar matters with a letter against The sequence of events is particularly dis- In turn, Mr. GINGRICH's transgressions en- the offender. For violations, which I consider turbing because after the initial submission of gendered a series of behaviors from people in morally and ethically far worse, Members were inaccurate information in December 1994, Mr. both parties and in the press that play to their given little more than a perfunctory slap on the GINGRICH had multiple opportunities to correct worst instincts, and that undermine the con- hand. the misstatements but failed to do so until his fidence people have in their Government. I consider this action against the Speaker November 13, 1996, appearance before the Last but not least, the blame resides as well excessive and unwarranted. For that reason, I investigative subcommittee. Most distressing is with the House ethics process, a process so intend to vote against the Ethics Committee's the fact that when the scope of the investiga- open to perversion that it raises questions recommendation. A letter of reproval should tion was expanded on September 26, 1996, to about its ability to protect individual rights. It be sufficient as it was for the Minority Leader, include the issue of whether Mr. GINGRICH pro- has unfortunately become so susceptible to RICHARD GEPHARDT; Minority Whip, DAVID vided accurate, reliable, and complete infor- manipulation that the House leadership and BONIOR and for violations far more serious mation to the committee, Mr. GINGRICH failed committee chair can, and has, unilaterally dis- than the Speaker's. to make an immediate diligent effort to deter- torted its most sensitive proceedings, denying Mr. CONYERS. Mr. Speaker, this is a sad mine if he had in fact submitted incorrect infor- the House and the American public the time to day for the House of Representatives and for mation to the committee, and to correct any reflect. the American people. For the first time in his- errors that may have been made. Over the weekend, I read the Cole report. I tory, our body will be voting to punish the Indeed, in response to the investigative sub- come away from it believing that Mr. GINGRICH Speaker of the House. How we as a body act committee's letter of October 1, 1996, request- knew exactly what he was doing, based on his to punish Mr. GINGRICH will send a message ing that Mr. GINGRICH produce all documents intimate familiarity with the 1989 case involv- to the American public. It will say whether we relied on to prepare the letters previously sub- ing the American Campaign Academy. In that are able to monitor our own institution; it will mitted to the committee, Mr. GINGRICH wrote case, the IRS and a tax court found that the say whether we prefer party loyalty to truth to the subcommittee stating how busy he was academy, which was run by Mr. GINGRICH's and integrity; it will say whether Mr. GINGRICH at the time the various letters were submitted, closest personal advisor and which was rep- is the Member best suited to represent our in- but also affirming that he had reviewed the resented by Mr. GINGRICH's lawyer, was ineli- stitution. H234 CONGRESSIONAL RECORD — HOUSE January 21, 1997 The punishment contained in House Resolu- faith in their Government. I find it unconscion- ommending a reprimand, Special Counsel tion 31 is inadequate. The punishment neither able that my colleagues in the majority, after Cole stated that the Ethics Committee, in rec- reflects the seriousness of the misdeeds ad- hearing Mr. GINGRICH's admission, would vote ommending a reprimand, recognized that this mitted to by Mr. GINGRICH nor Mr. GINGRICH's to reinstate him as Speaker of the House. Are matter fell somewhere in between a reprimand history of abuse of the rules of the House. they saying that Mr. GINGRICH is the best per- and censure. It would seem to me that this is Make no mistake about the gravity of the son among their ranks to lead their party and an important fact, that the subcommittee which charges against GINGRICH. Certain Members to lead the House of Representatives? Mr. investigated this case did not feel comfortable of the majority have attempted to portray Mr. GINGRICH himself has said that Ethics Commit- with a finding of reprimand. GINGRICH's misleading statements as over- tee investigations of a Speaker must ``meet a Additionally, this investigation undertaken by sight, and they have attempted to portray the higher standard of public accountability'' than the House has now been referred to the Inter- tax law he violated as arcane. Do not let these those involving other Members of the House. nal Revenue Service for further investigation statements mislead the entire body. By voting for this resolution, will we really be relative to Tax Code violations. And last, the Speaker GINGRICH has admitted to all of the meeting that higher standard? imposition of a $300,000 fine, unprecedented violations alleged by the subcommittee. He ac- I urge my colleagues on the other side of in the history of the institution, should con- knowledged that `ìn my name and over my the aisle to reconsider keeping Mr. GINGRICH vince every Member that this is not an offense signature, inaccurate, incomplete, and unreli- as Speaker. Although the majority's rules may which is made into a simple reprimand by lev- able statements were given to the committee'' allow him to remain Speaker, the ethical ying such a harsh fine. Rather, the fine is in- and that ``he brought down on the people's lapses of Mr. GINGRICH demand that he step dicative that this matter is more severe than a House a controversy which could weaken the aside. As the January 21, 1997, Atlanta Jour- reprimand and should be taken up to censure. faith people have in their Government.'' The nal-Constitution has stated, ``Mr. GINGRICH will A censure would then solve the problem of special prosecutor has make it clear that he dishonor the House every time he picks up the removing a Speaker who lacks the decency to believes that Mr. GINGRICH intentionally misled Speaker's gavel.'' The New York Times also remove himself from office. The total lack of the ethics counsel. The special prosecutor and urges Mr. GINGRICH to step aside: ``That find- respect he shows for the House and thereby the ethics committee also made it clear that ing [of James Cole], and the considerable evi- the American people warrants this House to Mr. GINGRICH violated the agreement that for- dence that backs it up, make it clear that Mr. reject the committee's recommendation and bid him to conduct a media strategy to mini- GINGRICH has no business serving as Speak- impose a sanction of censure. mize, or spin, the findings of the Ethics Com- er. His ego got him into this mess, and that The imposition of a mere reprimand today mittee. And after review of the committee's re- same ego is now driving him to compound the will leave a stigma over this Speaker that will port, it seems very likely that Mr. GINGRICH damage.'' As William Carlos Williams noted, haunt every Member of the House for the rest has violated tax law. And GINGRICH did not ``Leadership passes into empire; empire be- of this Congress. violate arcane tax law, but rather the very gets insolence; insolence brings ruin.'' It is Mrs. JOHNSON of Connecticut. Mr. basic premise that you cannot use tax-exempt time for the majority to do the right thing. Speaker, I move the previous question funds for political purposes. He used tax-ex- Mr. STOKES. Mr. Speaker, I am reminded on the resolution. empt funds to help build a political machine. today of what occurred in the House of Rep- The previous question was ordered. And it is clear that this is not the end of Mr. resentatives a few years ago when I chaired The SPEAKER pro tempore. The GINGRICH's ethical and legal troubles. The the Ethics Committee. We had undertaken an question is on the resolution. committee will make available to the IRS all extensive investigation, led by Joseph The question was taken; and the relevant documents produced during the sub- Califano, a noted Washington lawyer whom I Speaker pro tempore announced that committee's inquiry and establish a liaison had hired as special counsel. Mr. Califano's the ayes appeared to have it. with the IRS. The Department of Justice may position to our committee was the same as RECORDED VOTE further investigate the actions of Mr. GINGRICH. the position of Mr. James M. Cole, special Mr. CARDIN. Mr. Speaker, I demand We have no idea what these, or other inves- counsel to this committee. This particular in- a recorded vote. tigations, find. But, it does not matter. Be- vestigation surrounded allegations of sex and A recorded vote was ordered. cause what we already know is enough for us drugs involvement between Members of Con- The vote was taken by electronic de- to say, enough is enough, let us show the gress and House pages. vice, and there were—ayes 395, noes 28, American public that will have the strength At the end of our investigation, the Ethics answered ‘‘present’’ 5, not voting 6, as and integrity to punish our Members. And a Committee brought charges against two Mem- follows: slap on the wrist of Mr. GINGRICH that allows bers of the House. These charges resulted in [Roll No. 8] him to retain the Speaker's gavel, does not findings that these two Members had been in- show our strength or integrity. volved in sex with House pages. Our rec- AYES—395 Further, this is not the first time that Mr. ommendation to the House in both cases was Ackerman Boucher Crane Aderholt Boyd Crapo GINGRICH has been found to have violated a reprimand for both Members. As chairman Allen Brady Cubin House rules. The Speaker has already been of the Ethics Committee, I presented the com- Andrews Brown (CA) Cummings cited six times for his disregard of the House mittee's case on the floor of the House. Fol- Archer Brown (FL) Cunningham rules. It has become very clear that Mr. GING- lowing my presentation, the leadership on both Armey Brown (OH) Danner Bachus Bryant Davis (FL) RICH has shown a willful disregard for our sides of the aisle joined together on a resolu- Baesler Bunning Davis (IL) rules. In fact, Mr. James Cole has found that tion to raise the recommendation of reprimand Baker Burr Davis (VA) `òver a number of years and in a number of to a greater penalty, that of censure. The vote Baldacci Calvert Deal Ballenger Camp DeFazio situations * * * Mr. GINGRICH showed a dis- was taken and both Members were censured. Barcia Campbell DeGette regard and lack of respect for the standards of That occurred, of course, in a Congress where Barrett (NE) Canady Delahunt conduct that applied to his activities.'' the leadership on neither side was involved in Barrett (WI) Cannon DeLauro This willful ``disregard and lack of respect for breaking the rules of the House. Bass Capps Dellums Bateman Cardin Deutsch the standards of conduct'' make it clear that Today, we are faced with the leader of the Becerra Castle Diaz-Balart the punishment of reprimand does not reflect House who not only has broken the rules of Bentsen Chabot Dickey the seriousness of Mr. GINGRICH'S multiple of- the House, but has been described by Mr. Bereuter Chambliss Dicks fenses. Comparable offenses historically have James M. Cole, special counsel, as being in- Berman Chenoweth Dingell Berry Christensen Dixon met with more severe punishment. In 1979, volved in conduct where the violation did not Bilbray Clay Doggett the House voted to censure a representative represent only a single instance of reckless Bilirakis Clayton Dooley for diverting staff salaries for personal use and conduct, but rather over a number of years Bishop Clement Doyle Blagojevich Clyburn Dreier in 1980, the House censured another rep- and in a number of situations, Mr. Cole states Bliley Coble Duncan resentative of financial misconduct. Mr. GING- emphatically that the Speaker, Mr. GINGRICH, Blumenauer Collins Dunn RICH diverted tax exempt funds for political showed a disregard and lack of respect for the Blunt Combest Edwards purposes and then attempted over several standard of conduct that applied to his activi- Boehlert Condit Ehlers Boehner Cook Ehrlich years to cover his tracks by misleading the ties. Bonilla Cooksey Emerson committee. Certainly, these actions are de- Moreover, the committee found that Speak- Bonior Costello Engel serving of at least a censure. er GINGRICH has admitted that he submitted Bono Cox English Unfortunately Mr. Speaker, Mr. GINGRICH's information to the committee which was inac- Borski Coyne Ensign Boswell Cramer Eshoo actions have weakened the American public's curate, incomplete, and unreliable. In rec- January 21, 1997 CONGRESSIONAL RECORD — HOUSE H235 Etheridge LaHood Ramstad Wise Woolsey Yates There was no objection. Evans Lampson Rangel Wolf Wynn Young (FL) f Everett Lantos Regula NOES—28 Ewing Largent Reyes Farr Latham Richardson Barr Hilliard Sessions ELECTION OF MAJORITY MEM- Fattah LaTourette Riggs Bartlett Hunter Smith (TX) BERS TO CERTAIN STANDING Fawell Lazio Riley Barton Johnson, Sam Solomon COMMITTEES OF THE HOUSE Fazio Leach Rivers Burton King (NY) Stump Filner Levin Roemer Buyer Lewis (CA) Taylor (MS) Mr. BOEHNER. Mr. Speaker, by di- Flake Lewis (GA) Rogan Callahan Livingston Taylor (NC) rection of the Republican Conference, I Coburn McKeon Wicker Foglietta Lewis (KY) Rogers offer a privileged resolution (H. Res. 32) DeLay Mica Young (AK) Foley Linder Rohrabacher Doolittle Myrick and ask for its immediate consider- Forbes Lipinski Ros-Lehtinen Herger Packard ation. Ford LoBiondo Rothman Fowler Lofgren Roukema ANSWERED ‘‘PRESENT’’—5 The Clerk read the resolution, as fol- Fox Lowey lows: Roybal-Allard Abercrombie Hastings (FL) Waters Frank (MA) Lucas Royce Conyers McDermott H. RES. 32 Franks (NJ) Luther Rush Frelinghuysen Maloney (CT) NOT VOTING—6 Resolved, That the following named Mem- Ryun bers be, and they are hereby, elected to the Frost Maloney (NY) Sabo Carson Kolbe Tejeda Furse Manton following standing committees: Salmon Granger Tauzin Watts (OK) Committee on Banking: Mr. La Tourette to Gallegly Manzullo Sanchez Ganske Markey b 1407 rank following Mr. Sessions. Sanders Committee on Education and the Gejdenson Martinez Sandlin Mr. RAMSTAD changed his vote Gekas Mascara Workforce: Mr. Paul; Mr. Bob Schaffer of Sanford Gephardt Matsui from ‘‘no’’ to ‘‘aye.’’ Sawyer Colorado; Mr. Peterson of Pennsylvania; Mr. Gibbons McCarthy (MO) So the resolution was agreed to. Saxton Upton; Mr. Deal of Georgia; Mr. Hilleary; Gilchrest McCarthy (NY) The result of the vote was announced Scarborough and Mr. Scarborough; all to rank in the Gillmor McCollum Schaefer, Dan as above recorded. named order following Mr. Norwood of Geor- Gilman McCrery Schaffer, Bob A motion to reconsider was laid on gia. Gonzalez McDade the table. Committee on Government Reform and Goode McGovern Schiff Goodlatte McHale Schumer f Oversight: Mr. Barr of Georgia to rank fol- Goodling McHugh Scott PERSONAL EXPLANATION lowing Mr. Snowbarger. Gordon McInnis Sensenbrenner Committee on International Relations: Mr. Goss McIntosh Serrano Mr. TAUZIN. Mr. Speaker, I was unavoid- Brady to rank following Mr. Moran of Kan- Graham McIntyre Shadegg ably detained for the last vote. If I were here, sas. Green McKinney Shaw I would have voted ``yes.'' Committee on Resources: Mr. Crapo to Greenwood McNulty Shays rank following Mr. Gibbons. Gutierrez Meehan Sherman PERSONAL EXPLANATION Committee on Science: Mr. Boehlert; Mr. Gutknecht Meek Shimkus Mr. WATTS of Oklahoma. Mr. Speaker, on Fawell; Mrs. Morella; Mr. Weldon of Penn- Hall (OH) Menendez Shuster sylvania; Mr. Rohrabacher; Mr. Schiff; Mr. Hall (TX) Metcalf Sisisky rollcall No. 8, I was unavoidably detained with a constituent. Had I been present, I would Barton of Texas; Mr. Calvert; Mr. Bartlett of Hamilton Millender- Skaggs Maryland; Mr. Ehlers; Mr. Weldon of Florida; Skeen Hansen McDonald have voted ``yes.'' Mr. Salmon; Mr. Davis; Mr. Gutknecht; Mr. Harman Miller (CA) Skelton f Hastert Miller (FL) Slaughter Foley; Mr. Ewing; Mr. Pickering; Mr. Can- Hastings (WA) Minge Smith (MI) GENERAL LEAVE non; Mr. Brady; and Mr. Cook. Hayworth Mink Smith (NJ) Committee on Small Business: Mr. Com- Mrs. JOHNSON of Connecticut. Mr. best; Mr. Hefley; Mr. Manzullo; Mr. Bartlett Hefley Moakley Smith (OR) Speaker, I ask unanimous consent that Hefner Molinari Smith, Adam of Maryland; Mrs. Smith of Washington; Mr. Hill Mollohan Smith, Linda all Members may have 5 legislative LoBiondo; Mrs. Kelly; Mr. Jones; Mr. Souder; Hilleary Moran (KS) Snowbarger days in which to revise and extend Mr. Chabot; Mr. Ryun; Mr. Snowbarger; Mr. Hinchey Moran (VA) Snyder their remarks on the resolution just Pappas; Mr. English; Mr. McIntosh; and Mrs. Hinojosa Morella Souder adopted. Emerson. Hobson Murtha Spence The SPEAKER pro tempore Mr. Committee on Veterans’ Affairs: Mr. Smith Hoekstra Nadler Spratt of New Jersey; Mr. Bilirakis; Mr. Spence; Mr. Neal LAHOOD. Is there objection to the re- Holden Stabenow Everett; Mr. Buyer; Mr. Quinn; Mr. Bachus; Hooley Nethercutt quest of the gentlewoman from Con- Stark Mr. Stearns; Mr. Dan Schaefer of Colorado; Horn Neumann Stearns necticut? Ney Mr. Moran of Kansas; Mr. Cooksey; Mr. Hostettler Stenholm There was no objection. Houghton Northup Hutchinson; Mr. Hunter; Mr. Hayworth; and Stokes Hoyer Norwood f Mrs. Chenoweth. Strickland Hulshof Nussle Stupak RESIGNATION AS MEMBER OF Mr. BOEHNER (during the reading). Hutchinson Oberstar Sununu COMMITTEE ON VETERANS’ AF- Hyde Obey Mr. Speaker, I ask unanimous consent Talent Inglis Olver FAIRS that the privileged resolution be con- Tanner Istook Ortiz The SPEAKER pro tempore laid be- sidered as read and printed in the Jackson (IL) Owens Tauscher Thomas fore the House the following resigna- RECORD. Jackson-Lee Oxley The SPEAKER pro tempore. Is there (TX) Pallone Thompson tion as a member of the Committee on Jefferson Pappas Thornberry Veterans’ Affairs: objection to the request of the gen- Jenkins Parker Thune tleman from Ohio? CONGRESS OF THE UNITED STATES, John Pascrell Thurman HOUSE OF REPRESENTATIVES, There was no objection. Johnson (CT) Pastor Tiahrt Tierney Washington, DC, January 21, 1997. The resolution was agreed to. Johnson (WI) Paul A motion to reconsider was laid on Johnson, E. B. Paxon Torres Re Request to take leave from Veterans Jones Payne Towns Committee. the table. Traficant Kanjorski Pease Hon. NEWT GINGRICH, f Turner Kaptur Pelosi The Capitol, Kasich Peterson (MN) Upton ELECTION OF MINORITY MEMBER Kelly Peterson (PA) Velazquez Washington, DC. DEAR NEWT: In light of my new assignment TO COMMITTEE ON COMMERCE Kennedy (MA) Petri Vento Kennedy (RI) Pickering Visclosky to the House Committee on Government Re- Mr. FAZIO of California. Mr. Speak- Kennelly Pickett Walsh form and Oversight, I hereby request that I er, I offer a privileged resolution (H. Wamp be granted a leave of absence from my as- Kildee Pitts Res. 33) and ask for its immediate con- Kilpatrick Pombo Watkins signed slot on the Committee on Veterans’ Kim Pomeroy Watt (NC) Affairs. sideration. Kind (WI) Porter Waxman Thank you for your consideration. The Clerk read the resolution, as fol- Kingston Portman Weldon (FL) With warmest regards, I am, lows: Kleczka Poshard Weldon (PA) Very truly yours, H. RES. 33 Klink Price (NC) Weller BOB BARR. Resolved, That the following named Mem- Klug Pryce (OH) Wexler Member of Congress. Knollenberg Quinn Weygand ber, be elected to the Committee on Com- Kucinich Radanovich White The SPEAKER pro tempore. Without merce, be designated to rank on that com- LaFalce Rahall Whitfield objection, the resignation is accepted. mittee as follows: