or the Tax Court in rendering a ruling on what they believed to be an unsettled area of the law.

When we looked at the letters that Mr. Gingrich had submitted concerning the Renewing American Civilization complaint, there were troubling aspects to those letters for the subcommittee. They contained definitive statements about facts that went to the heart of the issues placed before the committee, and in the case of the December 8 letter, it was in response to a direct request from the committee for specific information relating to the partisan political nature of the course and GOPAC's involvement in it.

Both letters were efforts by Mr. Gingrich to have the committee dismiss the complaints without further inquiry, and in such situations, the committee does and should place a great deal of reliance on the statements of the Members. The letters were prepared by Mr. Gingrich's lawyer, but after the subcommittee deposed the lawyers, the reasons for the statements appearing in those letters was not made any clearer.

It turned out that the lawyers did not conduct any independent factual research, and in looking at the information that the lawyers had available to them to write these letters, the subcommittee was unable to find any factual basis for the inaccurate statements contained in those letters.

A number of the exhibits attached to the complaint were fax transmittal sheets from GOPAC. While this did not on its face establish anything more than that GOPAC's fax machines had been used for the course, it certainly should have put the attorneys on notice that there was some relationship between the course and GOPAC that should have been examined before saying that GOPAC had absolutely no involvement in the course.

Mr. Gingrich's lawyers said they relied on Mr. Gingrich and his staff to ensure that the letters were accurate. However, none of Mr. Gingrich's staff had sufficient knowledge to be able to verify the facts of the letters. While Mr. Gaylord and Mr. Eisenach, two advisers of Mr. Gingrich, who had been involved in the course, did have sufficient knowledge to be able to verify many of the facts, they were not asked to do so.

The only person who reviewed the letters for accuracy with sufficient knowledge to verify those facts was Mr. Gingrich. The subcommittee considered the relevance of the reference to GOPAC in Mr. Gingrich's first letter to the committee, the October 4th letter. I will remind you that in that letter Mr. Gingrich stated that one of the entities that paid people to work on the course was GOPAC. Some Members of the committee believed that this was evidence of lack of intent on Mr. Gingrich's part, lack of intent to deceive the committee. They felt that if he had really planned to deceive the committee, he wouldn't have made such glaringly inconsistent statements in two of the letters he had submitted, other Members of the subcommittee and I appreciated this point, but believed that the first letter was of limited or little value.

The statement in that letter was only directed to establishing that congressional resources had not been used for developing the course. The first letter made no attempt to address the tax issues, even though that was a prominent feature of the complaint.

When the committee specifically focused Mr. Gingrich's attention on the tax issue, the questions concerning GOPAC's involvement in the course were answered in the negative.

During his testimony before the subcommittee, Mr. Gingrich stated that he was very busy during the times that the letters were prepared, that he did not intend to mislead the committee, and he apologized for his conduct. This statement was a relevant consideration for some of the Members of the committee, but not for others. The subcommittee concluded that because these inaccurate statements were provided to the committee, this matter was not resolved as expeditiously as it could have been. This caused a controversy over the matter to arise and last for a substantial period of time. It disrupted the operations of the House, and it cost the House a substantial sum of money in order to determine what the true facts were.

Based on the information that I have described and the considerations that were being discussed, I proposed a Statement of Alleged Violation to the subcommittee on December 12, 1996.

It contained three counts: The first count was that Mr. Gingrich's activities on behalf of the Abraham Lincoln Opportunity Foundation and those of others with his knowledge and approval violated ALOF status under 501(c)(3).

The second count was that Mr. Gingrich's activities and those of others with his knowledge and approval on behalf of Kennesaw State College Foundation, Progress and Freedom Foundation, and Reinhardt College, in regard to the Renewing American Civilization course, violated those organizations' status under 501(c)(3). And that Mr. Gingrich had provided information to the committee directly or through counsel that was material to matters under consideration by the committee which Mr. Gingrich knew or should have known was inaccurate, incomplete, and unreliable.

This was my proposal. It then went to the subcommittee for its deliberations, because it is the subcommittee's decision as to what, if any, charges will be brought.

In the subcommittee meeting there was a difference of opinion regarding whether to issue the Statement of Alleged Violations as it was drafted concerning the tax counts. There was concern expressed by deciding the tax issue in the context of an ethics case. This led quickly to a discussion of what the appropriate focus is of an Ethics Committee. A consensus began to build, at this point, around the view that the proper focus was the conduct of the Member, not the resolution of tax issues.

From the beginning of the preliminary inquiry, through to these deliberations, there was a desire on the part of each of the Members of the subcommittee to try and reach a unanimous conclusion in this matter. The Members felt that this was important in an effort to confirm the bipartisan nature of the ethics process.

The discussion then turned to what steps Mr. Gingrich had taken in regard to the two projects and what efforts he had made to ensure that they complied with the provisions of 501(c)(3). In particular, the subcommittee was concerned with the fact that Mr. Gingrich had been, in his words, very well aware of the American Campaign Academy case prior to embarking on these two projects. He had been involved with 501(c)(3) organizations to a sufficient de

gree to know that politics and tax deductible contributions are, as his lawyer stated, an explosive mix. And he was clearly involved in a project that had significant partisan political goals.

Finally, he had taken an aggressive approach to the tax laws. Even Mr. Gingrich's own lawyer who appeared before the committee had said that he would have advised him not to use the 501(c)(3) for these purposes. The subcommittee concluded that these were very significant and substantial warnings that were placed in Mr. Gingrich's path before going down the road of these projects. He should have heeded these warnings, and he did not. He did not take the trouble to get the advice he should have, and, as a result, this matter is here today.

In looking at this conduct in light of all of the facts and the circumstances, the subcommittee was faced with a disturbing choice: Either Mr. Gingrich did not seek legal advice because he was aware that it would not have permitted him to use a 501(c)(3) organization for the projects, or he was reckless in not taking care that as a Member of Congress, he make sure that his conduct conform with the law in an area where he had ample warning that his intended course of action was fraught with peril.

The subcommittee decided that regardless of the resolution of the 501(c)(3) tax question, Mr. Gingrich's conduct in this regard was improper, did not reflect creditably on the House, and was deserving of sanction.

The committee's deliberations then turned to the issue of the letters which Mr. Gingrich had provided. Naturally, the question centered on whether Mr. Gingrich had intentionally submitted inaccurate information. There was a belief that the record developed before the subcommittee was not conclusive on this point.

I had suggested that a good argument could be made, based on the record, that Mr. Gingrich had acted intentionally. However, I also told the Members of the subcommittee that it would be difficult to establish this at an adjudicatory hearing with a high degree of certainty.

The culmination of the evidence on this topic again left the subcommittee with a disturbing choice: Either Mr. Gingrich intentionally made misrepresentations to the committee, or he was again reckless in the way he provided information to the committee concerning a very important matter.

The standard that is applicable to the subcommittee's deliberations was whether there is reason to believe that Mr. Gingrich had acted as charged in this count of the Statement of Alleged Violation. All Members felt that this standard had been met in regard to the allegation that Mr. Gingrich knew that the information he provided to the committee was inaccurate. However, there was considerable discussion to the effect that if Mr. Gingrich wanted to admit to submitting information to the committee, that he should have known was inaccurate, the subcommittee would consider deleting the allegation that he knew the information was inaccurate. The Members were of the opinion that if there were to be a final adjudication of the matter, taking into account the higher standard of proof that would be present in such an adjudication, that the level of "should have known" would really be the appropriate framing of this charge based on the facts that were presented.

On December 13, 1996, the subcommittee issued a Statement of Alleged Violation charging Mr. Gingrich with three counts of violations of House rules. Two counts concerned the failure to seek legal advice described above, and one count concerned providing the committee with information which Mr. Gingrich knew or should have known was inaccurate.

At the time the subcommittee voted this Statement of Alleged Violation, the Members discussed the matter among themselves and reached a consensus that it would truly be in the best interest of the House for the matter to be resolved without going through a disciplinary hearing. It was estimated that such a hearing could last up to 3 months and that it would not begin for several months. Because of this, it was felt that this could put the House in some turmoil for up to 6 months. Even though the subcommittee members felt that it would be advantageous to the House to avoid a disciplinary hearing, they were all committed to one proposition: Any resolution of the matter had to reflect adequately the seriousness of the offenses presented.

To this end, the subcommittee members discussed and agreed upon a recommended sanction that they felt was fair in light of the conduct reflected in this matter. But they explicitly recognized that the full committee would make the ultimate decision as to the recommendation that should be sent to the full House.

In determining what the appropriate sanction should be in this matter, the subcommittee and I considered the seriousness of the conduct, the level of care exercised by Mr. Gingrich, the disruption caused to the House by the conduct, the cost to the House of having to pay for an extensive investigation, and the repetitive nature of the conduct.

As I noted above, the subcommittee was faced with troubling choices in each of the areas covered by the Statement of Alleged Violation: Either Mr. Gingrich's conduct in regard to the 501(c)(3) organizations and the letters was intentional or it was reckless. Neither choice reflects credibly on the House of Representatives.

While the subcommittee was not able to reach a comfortable conclusion on these issues, the fact that the choice was presented was a factor in determining the appropriate sanction. In addition, the violation did not represent only a single instance of reckless conduct, but rather over a number of years and in a number of situations Mr. Gingrich showed a disregard and lack of respect for the standard of conduct that applied to his activities.

Under the rules of the House, a reprimand is the appropriate sanction for a serious violation of the House rules. A censure is an appropriate sanction for a more serious violation of House rules.

It was the opinion of the subcommittee that this matter fell somewhere in between. Accordingly, the subcommittee and I recommend that the appropriate sanction in this matter should be a reprimand and a payment reimbursing the House for some of the costs of the investigation in the amount of $300,000.

Mr. Gingrich has agreed that this is the appropriate sanction in this matter. Beginning on December 15, 1996, Mr. Gingrich's counsel and I began discussions directed towards resolving the matter without a disciplinary hearing. The discussions lasted through December 20, and at that time an understanding was reached be

tween both Mr. Gingrich and the subcommittee concerning this matter. That understanding was put on the record on December 21, in the meeting of the subcommittee.

If I may, I would like to just read that portion of the record for the benefit of the members of the committee and the public: The subcommittee has had an opportunity to review the facts in this case and has had extensive discussion about the appropriate resolution of this matter.

Mr. Cardin then added, if I might just add here to your understanding, the members of the subcommittee prior to the adoption of the Statement of Alleged Violation were concerned that the nonpartisan deliberations of the subcommittee continue beyond findings of the subcommittee. Considering the record of the full ethics committee in the 104th Congress and the partisan environment in the full House, the members of the subcommittee feel that it was important to exercise bipartisan leadership beyond workings of the subcommittee.

I then continue. It was the opinion of the members of the subcommittee and the special counsel that based on the facts of this case as they are currently known, the appropriate sanction for the conduct described in the original Statement of Alleged Violation is a reprimand and the payment of $300,000 toward the cost of the preliminary inquiry.

In light of this opinion, the subcommittee members and the special counsel intend to recommend to the full committee that this sanction be recommended by the full committee to the House. The Members also intend to support this as the sanction in the committee and on the Floor of the House. However, if new facts are developed or brought to the attention of the members of the subcommittee, they are free to change their opinions.

The subcommittee, through its counsel, has communicated this to Mr. Gingrich through his counsel. Mr. Gingrich has agreed that if the subcommittee will amend the Statement of Alleged Violations to be one count instead of three counts, however still including all of the conduct described in the original Statement of Alleged Violation, and will allow the addition of some additional language which reflects aspects of the record in this matter concerning the involvement of Mr. Gingrich's counsel in the preparation of the letters described in the original Count III of the Statement of Alleged Violation, and these changes included removing the word "knew" from the phrase, "knew or should have known," he will admit to the entire Statement of Alleged Violation and agree to the view of the subcommittee members and the special counsel as to the appropriate sanction.

In light of Mr. Gingrich's admission to the Statement of Alleged Violation, the subcommittee is of the view that the rulings of the committee will not require an adjudicatory hearing to take place. However, a sanction hearing will need to be held under the rules of the subcommittee, and Mr. Gingrich desires to have the sanction hearing concluded as expeditiously as possible, but it is understood that this will not take place at the expense of orderly procedure and a full and fair opportunity for the full committee to be informed of any information necessary for each member of the full committee to be able to make a decision at the sanction hearing.