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House Calendar No. 1 House Calendar No. 1 105TH CONGRESS HOS FRPEET~VSREPORT 1st Session HOUSE OF REPRESENTATIVES 105-1 IN THE MATTER OF REPRESENTATIVE NEWT GINGRICH REPORT OF THE SELECT COMMITTEE ON ETHICS JANUARY 17, 1997.-Referred to the House Calendar and ordered to be printed U.S. GOVERNMENT PRINTING OFFICE 37-210 WASHINGTON : 1997 LETTER OF TRANSMITTAL CONGRESS OF THE UNITED STATES, Washington, DC, January 17, 1997. Hon. ROBIN CARLE, Clerk, House of Representatives, Washington, DC. DEAR MADAM CLERK: Pursuant to clause 4(e)(3) of Rule 10, and ,by direction of the Select Committee on Ethics, I herewith submit the attached report, "In the Matter of Representative Newt Ging- rich." Sincerely, NANcY L. JOHNSON, Chairman. (III) CONTENTS Page I. INTRODUCTION ......................................... ................................ I A. Procedural Background .............- .....-.--....................................... 1 B. Investigative Process ...... .... .... ---......-..................................... 3 C. Summary of the Subcommittee's Factual Findings .......................... 4 1.AOW /ACTV ...................................... .................................... 4 2. Renewing American Civilization .................................................. 5 3. Failure to Seek Legal Advice ...................................................... 7 4. Mr. Gingrich's Statements to the Committee ............................. 8 D. Statement of Alleged Violation ........................................................... 9 II. SUMMARY OF FACTs PERTAINING To AMERICAN CITIZENS TELEVISION 9 A. GOPAC ............................................................................................. 9 B. American Opportunities Workshop/American Citizens Television ... 11 1. Background ........................... -.................................................... 11 2. Planning and Purpose for AOW/ACTV .................... 13 3. Letters Describing Partisan, Political Nature of AOW/ACTV ... 16 4. AOW/ACTV in Mr. Gingrich's Congressional District ............... 18 5. GOPAC's Connection to ALOF and ACTV .................................. 19 6. GOPAC Funding of ALOF and ACTV ......................................... 20 III. SUMMARY OF FACTs PERTAINING TO "RENEWING AMERICAN CIVILIZA- TrON ...................................................................................... 22 A. Genesis of the Renewing American Civilization Movement and Course ................................................................................................. 22 B. Role of the Course in the Movement ................................................. 24 C. GOPAC and Renewing American Civilization .................................. 30 1. GOPAC's Adoption of the Renewing American Civilization Them e .......................................................................................... 30 2. GOPAC'S Inability To Fund Its Political Projects in 1992 and 1993 .............................................................................................. 31 3. GOPAC's Involvement in the Development, Funding, and Management of the Renewing American Civilization Course . 32 a. GOPAC Personnel .................................................................. 32 b. Involvement of GOPAC Charter Members in Course De- sign ....................................................................................... 35 c. Letters sent by GOPAC ......................................................... 35 D. "Replacing the Welfare State with an Opportunity Society" as a Political Tool ................................................................................... 38 E. Renewing American Civilization House Working Group ................. 44 F. Marketing of the Course ...................................................................... 46 G. Kennesaw State College's Role in the Course ................................... 51 H. Reinhardt College's Role in the Course ............................................. 53 I. End of Renewing American Civilization Course ................................ 55 IV. ETHICS COMMITTEE APPROVAL OF COURSE .................................................. 55 V. LEGAL ADVICE SOUGHT AND RECEIVED ....................................................... 58 VI. SUMMARY OF THE REPORT OF THE SUBCOMMITIEE's EXPERT ..................... 63 A . Introduction .......................................................................................... 63 B. Qualifications of the Subcommittee's Expert .................................... 63 C. Summary of the Expert's Conclusions ............................................... 64 1. The American Citizens Television Program ................................ 65 a. Private Benefit Prohibition ................................................... 65 b. Campaign Intervention Prohibition ...................................... 66 2. The Renewing American Civilization Course ............................. 67 a. Private Benefit Prohibition .................................................. 67 b. Campaign Intervention Prohibition ...................................... 69 D. Advice Ms. Ready Would Have Given ................................................ 70 VII. SUMMARY OF CONCLUSIONS OF MR. GINGRICH'S TAX COUNSEL .................. 70 Page A . Introduction .................................-......-.. ---.-. --.--.-.... -..-... ----....... -. 70 B. Qualifications of Mr. Gingrich's Tax Counsel .............................- C. Summary of Conclusions of Mr. Gingrich's Tax Counsel ............. 71 1. Private Benefit Prohibition .......................................................... 72 2. Cam ai Intervention Prohibition ............................................. 75 D. Advice Mr. Holden Would Have Given .............................................. 76 VIII. SUMMARY OF FACTS PERTAINING TO STATEMENTS MADE TO THE COMMIT- TEE ............................... -* ** * ** * * ** **............................................................... A . Background .......................................................................................... 77 B. Statements Made by Mr. Gingrich to the Committee, Directly or Through Counsel ................................................... 78 1. Mr. Gingrich's December 8, 1994 Letter to the Committee ....... 78 2. March 27, 1995 Letter of Mr. Gingrich's Attorney to the Com- m ittee .......................................................................................... 79 C. Subcommittee's Inquiry Into Statements Made to the Committee . 80 D. Creation of the December 8, 1994 and March 27, 1995 Letters ...... 81 1. Creation of the December 8, 1994 Letter .................................... 82 2. Bases for Statements in the December 8, 1994 Letter .............. 85 3. Creation of the March 27, 1995 Letter ........................................ 87 4. Bases for Statements in the March 27, 1995 Letter .................. 89 IX. ANALYSIS AND CONCLUSION ........................................................................... 89 A . T ax Issues ............................................................................................. 89 B. Statements Made to the Committee .................................................. 90 C. Statement of Alleged Violation ........................................................... 91 1. Deliberations on the Tax Counts ................................................. 92 2. Deliberations Concerning the Letters ......................................... 92 3. Discussions with Mr. Gingrich's Counsel and Recommended Sanctions ..................................................................................... 93 D. Post-December 21, 1996 Activity ........................................................ 96 X. SUMMARY OF FACTS PERTAINING TO USE OF UNOFFICIAL RESOURCES 96 XI. AVAILABILITY OF DOCUMENTS TO INTERNAL REVENUE SERVICE ................. 97 Aappendix ................................................................................................................... 99 INDEX TO APPENDIX SUMMARY OF LAW PERTAINING To ORGANIZATIONS ExEMPfr FROM FEDERAL INCOME TAX UNDER SECTION 501(c)(3) OF THE INTERNAL REVENUE CODE A. Introduction................................................. 99 B. The Organizational Test and the Operational Test ..................... 99 1. Organizational Test ........................... ............. 99 2. Operational Test .......................................... 100 a. "Educational" Organizations May Qualify for Exemption Under Section 501(cX3) ...................................... 101 b. To Satisfy the Operational Test, an Organization Must Not Violate the "Private Benefit" Prohibition ........... ..- e102 c. To Satisfy the Operational Test, an Organization Must Not Be an "Action" Organization ...............-- .................-- 110 (i) If an Organization Participates in a Political Campaign, It Is an Action Organization Not Entitled to Exemption Section 501(cX3) .................. Under (a) The Prohibition is "Absolute".......... ........... 110 (b) Section 501(cX3) Organizations May Not E i r 113 Support a PAC....................... ....... 15 (c) "Express Advocacy" Is Not Required, anId n .. ......... 115 Is Prohibited if Used To Convey Support for o Ooacy tion to a Candidate ............ r or pposs- (d) Educational Activities May Conit P i or 115 Intervention ............ .... .................... 11 (e) Nonpartisan Activities May Constitute d 116 Cal Campaign Participation ........................ 11 (f) The IRS Has Found Violations of
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