House Calendar No. 89100TH CONGRESS HOUSE OF REPRESENTATIVES

1st SessionREPORT100-382

IN THE MATTER OF REPRESENTATIVERICHARD H. STALLINGS

REPORT

OF THE

COMMITTEE ONSTANDARDS OF OFFICIAL CONDUCT

HOUSE OF REPRESENTATIVES

*78-016

OCTOBER 20, 1987.-Referred to the House Calendar and

ordered to be printed

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON 1987

COMMITTEE ON STANDARDS OF OFFICIAL CONDUCT

JULIAN C. DIXON, California, ChairmanVIC FAZIO, California FLOYD D. SPENCE, South CarolinaBERNARD J. DWYER, New Jersey JOHN T. MYERS, IndianaALAN B. MOLLOHAN, West Virginia JAMES V. HANSEN, UtahJOSEPH M. GAYDOS, Pennsylvania CHARLES PASHAYAN, JR., CaliforniaCHESTER G. ATKINS, Massachusetts THOMAS E. PETRI, Wisconsin

LARRY E. CRAIG, IdahoRALPH L. LOTKIN, Chief Counsel

JAN LOUGHRY, Administrative Assistant

LETTER OF TRANSMITTAL

HOUSE OF REPRESENTATIVES,

COMMITTEE ON STANDARDS OF OFFICIAL CONDUCT,Washington, DC, October 20, 1987.

Hon. JIM WRIGHT, Speaker,House of Representatives,Washington, DC.

DEAR MR. SPEAKER: By direction of the Committee on Standardsof Official Conduct, I herewith submit the attached report, "In TheMatter of Representative Richard H. Stallings."

Sincerely,JULIAN C. DIXON,

Chairman.(III)

CONTENTS

Page

I. In trodu ction ............................................................................................................... 1II. H igh lights ......................................................................................... . ............ 2

III. Results of Investigation .......................................................................................... . 2IV . Legal A n alysis ......................................................................................................... 3V . C onclusion s ................................................................................................................ 4V I. R ecom m endation ..................................................................................................... 4

EXHIBITS

A. September 23, 1987, Resolution of Preliminary Inquiry ..................................... 7B. September 23, 1987, Notification to Representative Stallings ............................ 8C. September 28, 1987, Committee letter of inquiry ................................................. 9D. October 20, 1987, letter to Representative Stallings ............................................ 12

APPENDICES

1. Relevant extracts of Representative Stallings' F.E.C. reports ............................ 132. Representative Stallings' September 29, 1987, letter to the Committee ........... 173. Representative Stallings' October 5, 1987, letter to the Committee .................. 18

(v)

House Calendar No. 89100o CONGRESS REPORT

1st Session HOUSE OF REPRESENTATIVES 100-382

IN THE MATTER OF REPRESENTATIVE RICHARD H.STALLINGS

OCTOBER 20, 1987.-Referred to the House Calendar and ordered to be printed

Mr. DIXON, from the Committee on Standards of Official Conduct,submitted the following

REPORT

I. INTRODUCTION

The Committee on Standards of Official Conduct (the "Commit-tee") is authorized under the Rules of the House of Representatives(House Rule X, clause 4(e)(2)(B)), to investigate, in accordance withthe Committee's Rules of Procedure, any alleged violation by aMember, officer, or employee of the House, of the Code of OfficialConduct (House Rule XLIII). In addition, alleged violations of anylaw, rule, regulation, or other standard applicable to the conduct ofsuch Member, officer, or employee, in the performance of his or herduties, or the discharge of his or her responsibilities are within theCommittee's jurisdiction.

On September 11 and September 14, 1987, news articles reportedthat Representative Stallings' campaign organization lent $1,000 onMarch 9, 1987, to the congressman's administrative assistant forpersonal expenses, and lent $4,800 on April 17, 1987, to the con-gressman to enable his purchase of a car. According to the newsarticles, the loan to the administrative assistant was "to help thecongressional aide through a personal short-term financial crisis."Regarding the loan to Congressman Stallings, news reports indicat-ed that the transaction was undertaken to enable the congress-man's purchase of a "car that will be kept in Idaho and used forcampaign and personal purposes."

In the light of the news reports, the Committee obtained infor-mation corroborating that questionable financial transactions mayhave occurred in March and April, 1987, in connection with loansmade from the congressman's campaign committee. Thus, as an ex-ercise of authority and pursuant to the Committee's Rules of Proce-

78-016

dure, the Committee determined that a Preliminary Inquiry shouldbe undertaken with the view towards ascertaining all relevantfacts and reaching an appropriate disposition of the matter. To thisend, a Resolution of Preliminary Inquiry (Exhibit A) was adoptedon September 23, 1987, and Representative Stallings was notified ofthat Committee action (Exhibit B).

This report contains the results of the Committee's investigationundertaken pursuant to the Resolution.

II. HIGHLIGHTS

The Preliminary Inquiry established that, on two occasions, loanswere made from Representative Stallings campaign organization-one loan to the congressman and one loan to the congressman's ad-ministrative assistant-under circumstances that were in violationof House Rule XLIII, clause 6. Representative Stallings did not con-test the Committee's findings and, in fact, confirmed the informa-tion obtained by the Committee during the Preliminary Inquiry.

In order to expedite the matter, and in light of his acknowledge-ment that the subject transactions ran afoul of House Rule XLIII,clause 6, Congressman Stallings waived his rights under the Com-mittee's Rules of Procedure with respect to the issuance of a State-ment of Alleged Violation and disciplinary hearing. In this connec-tion, Representative Stallings admitted that error had been madein undertaking the two transactions and indicated that there wasno intent on his part to hide the loans (since they had been fullydisclosed on his F.E.C. reports). Rather, Representative Stallingssaid that the transactions were undertaken due to his failure to in-quire about restrictions on use of campaign funds imposed byHouse Rule XLIII, clause 6, based upon his mistaken assumptionthat the loans were governed only by the Federal Election Cam-paign Act (FECA).

The Committee believes that, under the circumstances here in-volved, a recommendation to the House of sanction would be inap-propriate. Instead, the Committee concludes that RepresentativeStallings should receive a letter from the Committee reproving himfor his violations. Accordingly, such correspondence will be sent toRepresentative Stallings and made publicly available along withthis report.

III. RESULTS OF INVESTIGATION

The Preliminary Inquiry focused on two transactions that in-volved Congressman Richard Stallings' campaign organization. Inthe first transaction, the campaign organization loaned $1,000 onMarch 9, 1987, to Mr. Gary Catron, Representative Stallings' Ad-ministrative Assistant. Documents filed with the F.E.C. (App. 1)disclosed that this loan, which was initiated on March 9, was to berepaid on September 30, 1987, with 7 percent interest. By letterdated September 29, 1987, Congressman Stallings notified the Com-mittee that this loan had been fully repaid. (App. 2)

Furthermore, by letter of October 5, 1987, Representative Stal-lings, in response to a Committee inquiry (Exh. C), informed theCommittee that the loan was to ease Mr. Catron's "short-term needfor funds for personal purposes" and, therefore, was not undertak-

en for the sole and exclusive benefit of the Stallings campaign or-ganization. (App. 3)

The Preliminary Inquiry also established, and RepresentativeStallings confirmed, that a loan to him was made on April 17, 1987,in the amount of $4,800 at 7 percent interest. (App. 3) In his Octo-ber 5, 1987, letter to the Committee, the congressman indicatedthat this loan was to enable his acquisition of an automobile whichcost $5,621.50, the use of which was for both personal and cam-paign purposes in the congressman's district in Idaho. Again, Rep-resentative Stallings stated that this loan was not undertaken forthe sole and exclusive benefit of the campaign, a conclusion readilyapparent given the mixed use of the automobile. Finally, in his Oc-tober 5, 1987, letter, Representative Stallings stated that he partici-pated in the process giving rise to the two loans.

IV. LEGAL ANALYSIS

Clause 6 of the Code of Official Conduct, House Rule XLIII,states:

A Member of the House of Representatives shall keephis campaign funds separate from his personal funds. Heshall convert no campaign funds to personal use in excessof reimbursement for legitimate and verifiable prior cam-paign expenditures and he shall expend no funds from hiscampaign account not attributable to bona fide campaignpurposes. (Emphasis added.)

In this Committee's report entitled, "Investigation of FinancialTransactions of Representative James Weaver with his CampaignOrganization", the Committee construed the scope and applicationof clause 6:

Any use of campaign funds which personally benefit theMember rather than to exclusively and solely benefit thecampaign is not a "bona fide campaign purpose. " More-over, a bona fide campaign purpose is not establishedmerely because the use of campaign money might result ina campaign benefit as an incident to benefits personallyrealized by the recipient of such funds * * * Any other in-terpretation and application of the third prohibition ofRule XLIII, clause 6, would open the door to a potentiallywide range of abuse and could result in situations wherecampaign monies were expended for the personal enjoy-ment, entertainment, or economic well-being of an individ-ual without any clear nexus that the funds so expendedachieved any political benefit to the disbursor (campaignorganization) of the funds * * * The test of the proprietyof any such campaign expenditure is, in the words of RuleXLIII, clause 6, whether the expenditure is 'attributable toa bona fide campaign purpose' and not whether the cam-paign has made money from that expenditure. * * * In thecase of a campaign organization lending money to its owncandidate, the committee would expect such bona fide loantransactions to be attended by facts supporting the need

for a loan to the candidate as opposed to a direct expendi-ture. H. Rep. 99-933, pp. 13-14. [Emphasis added.]

In the light of the above-quoted portions of the Weaver report, itis clear that the subject two loans were made in violation of thecited Rule; that is, they were not undertaken to "solely and exclu-sively" benefit the Stallings campaign organization. In his October5, 1987, letter, Representative Stallings acknowleged the subjectviolations.

V. CONCLUSIONS

A. The loan to Mr. Catron for $1,000 undertaken on March 9,1987, was to ease that individual's short-term financial difficultiesand was, therefore, not for the sole and exclusive benefit of theStallings campaign organization. Accordingly, this loan transactionwas in violation of House Rule XLIII, clause 6.

B. The loan to Congressman Stallings for $4,800 undertaken onApril 17, 1987, was to enable the congressman's acquisition of anautomobile to be used for campaign and personal purposes. Accord-ingly, since this transaction was not for the sole and exclusive ben-efit of the Stallings campaign organization, it, too, was a transac-tion which violated House Rule XLIII, clause 6.

VI. RECOMMENDATION

In reaching its decision on the appropriate disposition of thiscase, the Committee was guided by several important consider-ations-the nature of the violation and factors in mitigation. Thisapproach is well-established.

In the Manual of Offenses and Procedures, Korean Influence In-vestigation, (the "Manual') June 1977, the Committee offered, inpart, a detailed explanation of the process and considerations un-derlying sanction recommendations. The Manual states, in part:

House rule XLIII does not specify the sanction to be im-posed upon a finding that a Member failed to adhere tothe Code of Official Conduct. The committee should evalu-ate the particular circumstances of each violation to deter-mine whether any sanction is warranted and, if so, the se-verity of the sanction that is appropriate under circum-stances. Manual, p. 31.

In applying the above-quoted approach to specific fact situations,the Manual goes on to state:

In sum, the Committee should adopt the substantive * * *code provisions * * * to the disciplinary context by consid-ering the recommendation of sanctions where the sub-stance of those provisions was violated by a Memberacting: (1) with actual knowledge of all the relevant facts;(2) in reckless disregard of the relevant facts; or (3) withoutexercising reasonable care to ascertain the propriety of thegift or compensation accepted or of the transaction whenhe participated.

* * * * *

Similarly, violation of the * * * various code of conductstandards, which do not by their terms require any knowl-edge or intent, would provide a basis for imposing sanc-tions only upon proof that the Member was placed onnotice of an ethical problem and failed to discharge hisduty of reasonable inquiry to determine the propriety ofaccepting the tendered gift or payment. Manual, pp. 35-36.

The above-quoted excerpts have applicability to a violation ofHouse Rule XLIII, clause 6, as much as they have to transgressionsinvolving Members' receipt of gifts, which was central to the con-siderations in the Manual. Both matters are covered by the Code ofOfficial Conduct, House Rule XLIII. In either case, the Committeeconsiders the violation identifiable as well as whether the Memberwas on actual notice of an ethical problem and exercised reasona-ble care in the matter. In other words, the Committee considers notonly the violation, per se, but also factors in mitigation, including,for example, intent when determining the appropriate sanction.

Turning to the instant violation, it is readily apparent that thesubject House Rule and the restrictions imposed by its clear termsoperate to preclude situations such as here involved. Moreover, thisCommittee, on September 30, 1986, in connection with the reportconcerning former Representative James Weaver, offered guidanceto all Members regarding the operation of the Rule. Consequently,while he may not have been personally and directly informed (i.e.,have "actual notice") as to the limitations of clause 6, it neverthe-less remains that Representative Stallings was placed on construc-tive notice of the relevant prohibitions by virtue of the existence ofthe Rule itself as well as issuance of the Weaver report.

As regards factors in mitigation, several matters warrant consid-eration. First, there was no evidence of any improper intent on thepart of Congressman Stallings either to conceal the subject transac-tions or to act in violation of the constraints imposed by HouseRule XLIII, clause 6-the two loans were fully disclosed on the ap-propriate F.E.C. reports. Second, the violations arose out of Repre-sentative Stallings' mistaken assumption that the loans were gov-erned exclusively by the Federal Election Campaign Act. And,third, as soon as he became aware of his oversight of the control-ling restriction under House Rules, Representative Stallings tookcorrective action on his own initiative. (See Apps. 2 and 3.)

The subject Preliminary Inquiry established that RepresentativeStallings, through his Administrative Assistant, did attempt toobtain guidance on the propriety of the loan transactions. Specifi-cally, Mr. Catron called the F.E.C. asking about the matter. Whileit is true that transactions of the type here involved are within thejurisdiction of both the F.E.C. (Federal Election Campaign Act) andthis Committee (House Rule XLIII, clause 6), it is also clear that aneffort was made to obtain guidance, albeit inadequately. Finally,when apprised of the matter of impropriety, both RepresentativeStallings and Mr. Catron repaid the loans.

In view of the above, the Committee concludes that while Repre-sentative Stallings acted reasonably vis his inquiries to the F.E.C.,the same conclusion cannot, however, be reached in connectionwith the congressman's action vis Rule XLIII, clause 6. Again, Rep-

6

resentative Stallings is deemed to have been on constructive noticeof the subject prohibition. To conclude otherwise would effectivelyresult in the condonation of improper action based upon a defenseof ignorance of House Rules. Such an approach is clearly untenableon its face. At a minimum, Members have both the duty and re-sponsibility to be aware of relevant House Rules and to conformtheir actions accordingly.

In the present case, the Committee concludes that sufficient miti-gation was present to render unnecessary a sanction recommenda-tion to the House. Rather, the Committee believes the better courseis to formally and publicly reprove Representative Stallings for hisviolations. Accordingly, the Committee has sent such a letter toRepresentative Stallings on the matter, a copy of which will bemade publicly available in conjunction with issuance of this report.

This report was approved by the Committee on Standards of Offi-cial Conduct on October 15, 1987, by a vote of 12 ayes; 0 nays.

STATEMENT UNDER CLAUSE 2(l)(3)(A)

The Committee's oversight findings and recommendation are asstated above. No budget statement is submitted.

EXHI BIT A ,. S.,,S

a..,~~~1.. atOa-11 -o a.

M.O 1OUB2 01 ttpregitntatibe%Committee on *tanbarbl of Offilai Conburt

Sut *9-2. 11US1. Capiol*olbntton. ME 20515

September 23, 1987

RESOLUTION

WHEREAS, The Committee on Standards of Official Conduct has

been presented with evidence reasonably indicating that

Representative Richard H. Stallings expended funds from his

campaign account not attributable to bona fide campaign purposes

in March and April of 1987 in violation of House Rule XLIII,

clause 6; and

WHEREAS, pursuant to Committee Rule 13, the Committee

determines that the evidence of such alleged violation(s)

presented by the staff merits further inquiry;

NOW THEREFORE BE IT RESOLVED, that this Committee conduct a

Preliminary Inquiry in accordance with Rule 11(a) to determine

whether such violation(s) occurred; and

BE IT FURTHER RESOLVED, that the Chairman and Ranking

Minority Member may authorize and issue subpoenas, either for the

taking of depositions or the production of records, and that all

testimony taken by deposition or things produced by deposition or

otherwise shall be deemed to have been taken, produced, or

furnished in Executive Session; and

BE IT FURTHER RESOLVED, that Representative Stallings be

immediately notified of this action and informed of his rights

pursuant to the Rules of this Committee.

8

- B)EXHI BIT B

31Jou5 of itpr iutnati. ...Commltert on blanbarbt of OffiiaI (onbutl

built * -2, 11b. Caildmawbinston, 1C 20515

September 23, 1987

Honorable Richard H. StallingsU.S. House of Representatives1221 Longworth House Office BuildingWashington, D.C. 20515

Dear Colleague:

By direction of the Committee on Standards of OfficialConduct, we hereby notify you that the Committee has voted toconduct a Preliminary Inquiry to determine whether you may havecommitted one or more violations of the Code of Official Conduct,or a law, rule, regulation or other standard of conductapplicable to your conduct in the performance of your duties orin the-discharge of your responsibilities.

The complete text of a resolution agreed to by the Committeeat its meeting on September 23, 1987, is attached, along with acopy of the Committee's Rules of Procedure.

Pursuant to Rule ll(a)(2)(A) of the Committee's Rules, youhave the right "to present to the Committee, orally or inwriting, a statement respecting the allegations with respect towhich the inquiry is being held." If you wish to appear beforethe Committee to present oral testimony under oath, you must soinform the Committee and a Committee meeting will be scheduledfor the purpose of receiving that testimony.

Wncere

Jdalia C. Dixon

Acting for:Floyd D. SpenceRanking Minority Member

Enclosure

EXHIBIT C

-. 4 fl a. t AS~AD. a d|

t21* ofUD laeCttibtoCommit, on btanbarbo of ffidal Conbuct

&OWi *-2. NA. (qua*au&nglto. AC 20515September 28, 1987

Mr. Robert F. Bauer, EsquirePERKINS COIE11i0 Vermont Avenue, N.W.Washington, D.C. 20005

Dear Mr. Bauer:

As you know, the Committee on Standards of Official Conductadopted a Resolution of Preliminary Inquiry on September 23,1987, in connection with certain loans made from RepresentativeStallings' campaign organization to him and his AdministrativeAssistant in March and April of this year. By letter datedSeptember 25, 1987, Representative Stallings designated you ashis legal representative in this matter. In order that thePreliminary Inquiry can proceed expeditiously, this letter isintended to elicit Representative Stallings' responses to anumber of questions that need to be resolved in order for theCommittee to reach a prompt disposition. The questions follow.

I. Representative Stallings' loan from hys campaign

A. Please confirm whether the information disclosed on therelevant Federal Election Commission (F.E.C.) reports isaccurate as to amount borrowed, amounts repaid, and terms ofrepayment. A copy of the reports is enclosed.

B. In this Committee's report entitled, "Investigation ofFinancial Transactions of Representative James Weaver WithHis Campaign Organization", it stated:

"Any use of campaign funds which personallybenefit the Member rather than to exclusivelyand solely benefit the campaign is not a'bona fide campaign purpose.' Moreover, abona fide campaign purpose is not establishedmerely because the use of campaign moneymight result in a campaign benefit as anincident to benefits personally realized bythe recipient of such funds * * * Any other

Robert F. Bauer, EsquirePage 2September 28, 1987

interpretation and application of the thirdprohibition of Rule XLIII, clause 6, wouldopen the door to a potentially wide range ofabuse and could result in situations wherecampaign monies were expended for thepersonal enjoyment, entertainment, oreconomic well-being of an individual withoutany clear nexus that the funds so expendedachieved any political benefit to thedisbursor (campaign organization) of thefunds * * * The test of the propriety of any

such campaign expenditure is, in the words ofRule XLIII, clause 6, whether the expenditureis 'attributable to a bona fide campaignpurpose' and not whether the campaign hasmade money from that expenditure. k * * Inthe case of a campaign organization lendingmoney to its own candidate, the committeewould expect such bona fide loan transactionsto be attended by facts supporting the needfor a loan to the candidate as opposed to adirect expenditure." S. Rept. 99-933,September 30, 1986, pp. 13-14.

In the light of the above, please describe thecircumstances giving rise to the loan and explain whetherthe subject loan was, in the words of the report, to"exclusively and solely benefit the campaign." Thisquestion arises in view of Representative Stallings,reported statements to the press, copies enclosed, and aSeptember 14, 1987, letter to the Post-Register, copyenclosed, that the automobile acquired-wth the borrowedfunds was for both campaign and personal use.

C. What was the total purchase price of the automobileacquired with the use of borrowed campaign funds? Pleaseprovide a copy of the sales transaction document(s).

D. Did Representative Stallings contact the staff of thisCommittee for guidance on the propriety of the proposedborrowing prior to the funds having been lent?

E. Did Representative Stallings participate in the processresulting in the subject loan being made from his campaigncommittee? If so, how.

Robert F. Bauer, EsquirePage 3September 28, 1987

II. The loan to Repvesentative Stallings' AdministrativeAssistant

A. Please confirm whether the information disclosed on therelevant Federal Election Commission (F.E.C.) reports isaccurate as to amount borrowed, amounts repaid, and terms ofrepayment. A copy of the reports is enclosed.

B. Please describe the circumstances giving rise to theloan and explain whether the subject loan was, in the wordsof the Committee's report in the Weaver case, quoted above,to "exclusively and solely benefit the campaign."

D. Did Representative Stallings contact the staff of thisCommittee for guidance on the propriety of the proposedborrowing prior to the funds having been lent?

E. Did Representative Stallings participate in the processresulting in the subject loan being made from his campaigncommittee? If so, how.

As noted, it is the Committee's desire to proceed with thesubject Preliminary Inquiry as expeditiously as possible. Tothis end, I offer my full cooperation to achieve this objective.

Finally, and in keeping with past practice of the Committee,I request that Representative Stallings' responses to theforegoing questions to be signed by him and be under oath. Inthis regard, a certification of the type prescribed by 28 U.S.C.$1746 would be sufficient.

4Si erely

your

Cief Counsel CQ

RLL:jl

Enclosures

12

O~4A~C~hOO ~EXH1IbIT D

UI.. ouot of Atprtttiibtr 'm

Committee on *tanbarbt of Officil ConburtbutH RV-t U.S. (qild

*aflintms. DC 20515October 20, 1987

Honorable Richard H. StallingsU. S. House of Representatives1221 Longworth House Office BuildingWashington, D. C. 20515

Dear Colleague:

As you know, a Preliminary Inquiry was initiated by thisCommittee on September 23, 1987, in connection with certain loansmade from your campaign organization to you and youradministrative assistant in March and April of this year. TheCommittee found, and you agreed, that the subject loans were madein violation of House Rule XLIII, clause 6, which prohibits themaking of campaign expenditures not attributable to bona fidecampaign purposes. You acknowledged that the transactions werenot for the sole and exclusive benefit of the campaign and thusimproper in the light of the restriction of the rule.

Notwithstanding the violation, the Committee did concludethat the transactions arose out of your mistaken impression thatthe loans were solely governed by the Federal Election CampaignAct; and that there was no intent on your part to avoid publicdisclosure of the loans -- they were fully reported on yourF.E.C. reports. While such factors in mitigation are sufficientto avoid a recommendation that further disciplinary action betaken in the matter, the Committee emphasizes that the instantsituation arose out of your failure to conform your conduct tothe Code of Official Conduct, of which clause 6 is a part. Inthe Committee's view, Members have the duty and responsibility tobe aware of relevant House Rules, rules about which all Membersare considered to be on at least constructive notice regardingthe guidelines and prohibitions contained therein.

In the light of the above, the Committee has determined thatthe appropriate disposition of the matter is to formally andpublicly reprove you for your failure to act in accordance withRule XLIII, clause 6, and to notify you that any furtherviolation by you in connection with controlling standards ofconduct may well result in a recommendation that disciplinaryaction be considered by the House.

Sincerely,

LI!A C. DIX OL CE 4haira Rankin Minority mber

13

APPENDIX 1/oz

.OF REP AND UtSBARSOME

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17

APPENDIX 2RICHARD H. STALLINGS COMMITTEE ON

2i kT.|' - AGRICULTURE

........ Congress of tbe MIniteb htatt SCOI. SEw|,oeO E ONIS SCIENCE+ SPACE.

1202 221S21 gf)t....*'...AND TECHNOLOGYflUDC Of nprtitntaf iut% SELECT COMMITTEE

*llbington, IBC 20515 ON AGING

September 29, 1987

The Honorable Julian C. Dixon --

Chairman, House Committee on = r-Standards of Official Conduct r

2400 Rayburn H.O.B.Washington, D. C. 20515 _D

Dear Mr. Chairman:

With reference to the Preliminary Inquiry discussed in yourrecent letter to me, this is to advise you that the loans madeby my campaign committee to myself for $4,800 and to my adminis-trative assistant for $1,000 have both been paid back to thecommittee in full at seven percent interest.

I remain hopeful that there will be an early resolution tothis matter by your Committee.

Thank you.

,7 youa

Richard H. StallingsMember of Congress

18

APPENDIX 3

PERKNSCOEA LAM PANTMSR'.IP INCLUINGs PPP5ONAL CA:RPORATIONS

1110 V- ro' Avr.Ii'E. NW WMI.oToN. D C 20005(202)887.9030

October 5, 1987

7,Ralph Lotkin, Esq.

Chief Counsel C,

Committee on Standards I1 ,l

of official Conduct <

HT2 The Capitol - wWashington, D.C. 20515

Dear Mr. Lotkin:

Enclosed you will find a statement by Congressman Stallingsresponding to questions presented in your letter of September

28, 1987. The Congressman asks also that this letter, prepared

by the undersigned as his counsel, be incorporated as part of

his response to the Committee at this stage of the proceedings.

The Congressman's statement speaks for itself. TheCongressman does not dispute liability. He concedes that under

the Committee's interpretation of House rules presented in itsreport in the Weaver case, Investigation of Financial

Transactions of Representative James Weaver With His Campaign

Organization, Rpt No. 99-933 (99th Cong. 2nd Session), the

borrowings he authorized from the campaign were not consistentwith the stated requirements of those rules.

At the same time, the Congressman has made it clear thatwhile he wishes to cooperate with the Committee toward a prompt

disposition of the matter, he believes that any sanctionsimposed should be proportionate to the offense. The

Congressman has suffered a relatively severe penalty already asa result of this Committee's announcement of its PreliminaryInquiry. You will recall that this announcement was batched

with two others -- one concerning a Member against whom the

Committee issued a Statement of Alleged Violation, anotherconcerning a Member convicted in recent days of felony

offenses. The batching of the Stallings announcement with

these other announcements had the predictable effect of making

all the alleged transgressions in these instances appear to be

on a comparable footing. And indeed this is in large part howthe announcement was treated by the press.

TeEx- 44-0277 Peso U,. F.Szwu (Gr i.m): (202) 223-2088OTHER OFFICES A cnOiR e. ALAS" BELLEVUEL WASHINGTON- PORTLAND. OREGON SEAnCE. WASH IrNGTO\

19

-2 -

None of this is to suggest that the Congressman should notaccept responsibility for what has taken place but it is tosuggest that these proceedings be conducted with a view towardavoiding unnecessary damage to his reputation and standing withhis community. I urge, therefore, that the Committee bear inmind the following:

1. It is clear that Congressman Stallings had everyinnocent intent in authorizing the borrowings in question,because his campaign committee made full disclosure of them onthe public record in filings with the FEC and did so with theunderstanding, shared by the Congressman and Mr. Catron, thatthe FECA did not prohibit them.:/;

2. All of the loans made were short-term in character andin relatively small amounts. Moreover, while this does notaddress the question of "sole and exclusive" campaign use,each of the loans was repayable with interest;

3. The loans have been fully repaid.

In these circumstances, I ask that the Committee reportissued in this matter not recommend disciplinary action. Inote that the Committee in Weaver resolved against disciplinaryaction on the basis that the Congressman "disclosed the fact ofhis borrowings from his campaign organization and, therefore,there was no evidence of an intent to avoid public notice ofthose transactions." The Committee concluded that "thesecircumstances dictate that no disciplinary action be taken onthis matter." Weaver, supra at p. 16. (Emphasis added)

_/ Mr. Catron clearly recalls making the call in questionto the FEC and receiving what he took to be assurancethat the law did not prohibit the proposed loan. Atthe time of recent press attention in Idaho to theloan, he contacted the FEC again to confirm, with Ms.Christina Vanbrakle, that the agency had a record ofthe original telephone conversation. Thus, it may bethat Mr. Catron and his original FEC contact did notcommunicate clearly on the correct response to hisquestion; but there is no question that he made thecall, understood (correctly or incorrectly) that theproposed loan was permissible and proceeded on thatunderstanding. It is also beyond question that theFEC routinely provides advice informally on FECArequirements through its toll-free information lineand by other means, and that, while this advice is notbinding on the agency, many of those receiving thisadvice act on it -- for there would otherwise be nopoint in their seeking the advice in the first place.I make this statement with confidence as an attorneywho has practiced before the agency for 11 years.

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This recommendation was approved unanimously by theCommittee. The facts of this matter are, in any event, lessinvolved and present no basis upon which the Committee wouldarrive at any more severe conclusion in the matter of sanctions.

Finally, in the interest of an expedited resolution, theCongressman waives his right under Committee Rules 11, 12 and16 but conditions this waiver on a favorable disposition by theCommittee of his request for an oral presentation, by counselor in person, in support of his strongly held view that nodisciplinary action is warranted.

truly yours,

Robert F. |auer

2642B

21

October 5, 1987

Ralph Lotkin, Esq.Chief Counselcommittee on Standards

of official ConductHT 2 The CapitolWashington, D.C. 20515

Dear Mr. Lotkin:

I am responding to your letter dated September 28, 1987setting forth certain questions about loans made by myprincipal campaign committee to myself and my administrativeassistant, Mr. Gary Catron. Following the format of yourinquiry, I supply answers to each of the questions in turn:

I.A. The information presented on the relevant report ofour principal campaign committee to the Federal ElectionCommission ("FEC"), which is enclosed with your inquiry, iscorrect.

I.B. I had experienced disabling mechanical difficultieswith a car I had used for a range of purposes, campaign-relatedand personal, when I was in the District. As I have statedpublicly, those purposes included but were not limited tocampaign purposes.

Upon locating a used car to replace the one I thencurrently owned, I arranged with my campaign committee to makea short-term loan to me, repayable with interest, to enable meto make full payment on the car. In the end, on a purchaseprice of $5,621.50, I made a payment from personal funds of$821.50 and the campaign loaned me the balance of $4,800.

Because the use I contemplated for the automobile wasmixed, including both campaign and personal uses, I am unableto state that the loan made to me for the used car purchase wasto "exclusively and solely benefit the campaign." Please note,however, that my loan followed closely in time the one Iauthorized to Mr. Catron, which he accepted after obtainingwhat he believed to be confirmation from the FEC that the loanwould not violate applicable federal law. This was myunderstanding in authorizing the loan to Mr. Catron and my

22

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understanding as well in proceeding with the loan for the usedcar intended for the purposes I have described.

I.C. The total purchase price of the automobile wan$5,621.50, evidenced by the sales transaction document attachedin accordance with your request.

I.D. I did not contact the staff of the Committee onStandards of Official Conduct for "guidance on the propriety ofthe proposed borrowing prior to the funds having been lent."The error I made in this instance was overlooking therequirements of the House rules on the mistaken assumption thatthe matter was controlled by the Federal Election Campaign Act("FECA"). And, as I stated, I was under the impression from myearlier experience with the loan to Mr. Catron that the FECAdid not present any prohibition on loans of this naturerepayable with interest over a very short term.

I.E. The loan was made upon my request to the campaigncommittee.

II.A. The information presented on the FEC reports,enclosed with your inquiry, is correct.

II.B. Mr. Catron approached me some time before March 9,

1987 to discuss the question of whether he could borrow alimited amount of money, over a short period of time, from mycampaign committee, repayable with interest. Mr. Catron had ashort-term need for funds for personal purposes. It was my

understanding that Mr. Catron contacted the FEC and determinedthat there was neither prohibition nor precedent standing inthe way of proceeding with the proposed loan. On this basis,

the loan was made. In the circumstances, I cannot state thatthis was a loan to "exclusively and solely benefit thecampaign."

II.C. Neither I nor Mr. Catron contacted the staff of thecommittee for "guidance on the propriety of the proposed

borrowing prior to the funds having been lent." The reasonsfor this omission appear in my response to I.D.

II.D. The loan to Mr. Catron by the principal campaigncommittee was made with my explicit authorization.

I certify, under penalty of perjury, that the foregoing is trueand correct. Executed on o

Richard StallingsMember of Congress

2641B/71-7

A-'t-1y (~'clfC~'k D.C.

M1Cammision Expirm June 30, 1992

23

VEHICLE BUYERS ORDER

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ALL WARRANTIES, IF ANY, BY A MANUFACTURER OR SUPPLIER OTHER THAN DEALER ARE THEIRS. NOT DEALER'S. AND ONLY SUCH MANUFAC-rUFER OR OTHER SUPPLIER SHALL BE LIABLE FOR PERFORMANCE UNDER SUCH WARRANTIES UNLESS DEALER FURNISHES BUYER WITH ASEPARATEITRITTEN WARRANTY OR SERVICE CONTRACT MADE BY DEALER ON ITS OWN BEHALFDEALER HEREBY DISCLAIMS ALL WARRANTIES.EXPRESS ORMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE (A)ON ALL GOODS ANLSERVICES SOLD BY DEALER. AND (B) ON ALL USED VEHICLES WHICH ARE HEREBY SOLD "AS IS -NOT EXPRESSLY WARRANTED OR GUARANTEED-

THIS 0RDER IS NOT A BINDING COTRACT.

- ~~~SALEEMAR IRAVN, OLHA

A P P R O V E D D . E l l3, 1 11 4,

CtEDIT APPROVED ET[ CR0./ RUl

2 111-71 PADDED FOR S....