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Report: Deal violated ethics rules
Former congressman says he did nothing wrong
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Forsyth County News

Results of ethics investigation

In a 138-page report, the Office of Congressional Ethics found former U.S. Rep. Nathan Deal may have violated the following six ethics rules:

• By telling the OCE that he interceded with state officials as a “public servant,” Deal may have violated House rules that prohibit members from using their position for personal gain. Deal says he was representing constituents in the meetings.

• By directing his chief of staff to use his House e-mail account to set up meetings with state officials and by having the chief of staff accompany him to meetings, Deal may have violated the House’s prohibition of using House equipment and resources for personal business purposes.

• By failing to disclose $75,000 in wages from Gainesville Salvage and Disposal, Deal may have violated the House Ethics Manual’s directive to disclose all earned income. Deal says the payments should have been reported as equity payments, and he amended his tax returns for 2006, 2007 and 2008 to reflect that.

• Because his 2008 tax return showed Deal earned $75,000 in wages from the salvage business, Deal may have violated the earned income limitation of $25,830.

• Because Deal is listed on incorporation papers as the corporate secretary for the salvage business and because his tax return showed he earned $75,000 in 2008, Deal may have violated the prohibition on receiving compensation as a corporate officer. Deal says the $75,000 was not wages.

• Because Deal failed to disclose his status as the secretary of the salvage corporation, Deal may have violated the House Ethics Manual’s directive to disclose all nongovernmental positions held.

Source: Report of the Office of Congressional Ethics

Former U.S. Rep. Nathan Deal may have violated six House ethics rules by earning too much outside income and by lobbying state officials to protect his Gainesville-based auto salvage business, the Office of Congressional Ethics said in a report released Monday.

Deal described the 138-page report as a “politically motivated witch hunt” and said it wouldn’t affect his bid to become Georgia’s next governor.

“I have done nothing wrong and am not going to let this tarnish my 30-year record of public service,” Deal said in an e-mail sent to supporters Monday afternoon.

“Our campaign will not miss a beat, and we continue our quest to become the next governor of Georgia.”

The Office of Congressional Ethics — a nonpartisan office charged with investigating whether allegations against members of Congress merit review by the ethics committees — began its investigation in October.

The OCE’s board  of ethics, made up of four Democrats and four Republicans, voted unanimously on Jan. 28 to send the report to the House Ethics Committee for investigation and on March 26 to make the report public.

Deal resigned from Congress on March 21 after casting a vote against the health care overhaul bill. Because he is no longer in the U.S. House, he faces no penalty from the probe.

In its report, the OCE wrote that Deal violated House rules when he met with Georgia officials in 2008 and 2009 to preserve the contract his business, Gainesville Salvage & Disposal, had with the state.

According to the report, Deal made at least $75,000 in 2008 in outside income, well over the limit of $25,830.

The report also said Deal used House resources and staff to protect the business, which had a no-bid contract with the state to facilitate the inspection of damaged vehicles before they could be sold or driven, the report said.

Deal did not consent to an interview with the ethics office, citing scheduling conflicts. But he gave the office a written statement defending his actions.

Citizens for Responsibility and Ethics in Washington filed an ethics complaint against Deal with the OCE in August, alleging Deal used his position as a member of Congress to protect the business.

The organization based its complaint on a report that appeared in August in the Atlanta Journal-Constitution.

The report implied that Deal pulled strings with help from Lt. Gov. Casey Cagle to save the state-operated inspection program for salvaged vehicles.

Gainesville Salvage is primarily an auction yard for totaled vehicles.

Until recently, however, the business served as a site for state employees to inspect rebuilt vehicles twice a month — a deal it had with the state since shortly after the business opened in 1990.

Deal’s involvement in the program came under fire last fall after reports that he intervened when Department of Revenue Commissioner Bart

Graham tried to privatize the state salvage inspection program.

Graham oversees the program, and said at the time that privatization would make the program more competitive.

Deal raised questions about the program’s safety, if privatized, and scheduled three meetings with Graham.

Deal’s congressional Chief of Staff Chris Riley arranged the meetings through Cagle using his congressional e-mail account.

The report said Cagle refused to be interviewed, but it said his office did provide information about the meetings between Deal and Graham.

A statement from Cagle’s office criticized the report for omitting dozens of interactions between Cagle’s office and the OCE.

“We have voluntarily taken an active role in an investigation that we are not even the subject of and furthermore conducted by an organization that exercises no jurisdiction over state constitutional officers,” Cagle said in a statement. “Simply put, we’ve given them everything we have to give them.”

The report said Graham refused to cooperate unless he was subpoenaed.

“The commissioner is not commenting on any aspect of that report,” Department of Revenue spokesman Reg Lansbury said Monday.

Melanie Sloan, the executive director of CREW, said she was happy with the ethics office’s report, and she suggested the U.S. Justice Department launch a criminal probe.

“Rep. Deal may skate for abusing his position as a member of Congress for his personal financial benefit, but lying on personal financial disclosure forms is not just a violation of House rules, it’s a federal crime,” Sloan said in a statement.

But a Deal spokesman said the allegations are an attempt by Democrats to discredit Deal’s gubernatorial ambitions.

“The only shred of truth in this political attack is that an innocent accounting error was made and subsequently corrected,” said Harris Blackwood, a spokesman for the Deal campaign.

“This has always been a political witch hunt fueled by Democrats who fear that Roy Barnes will lose the governor’s race to Nathan Deal,” Blackwood said. “In its own report, the Office of Congressional Ethics admits that its efforts were incomplete and it does not conclude that Mr. Deal did anything wrong. That’s because Nathan Deal did nothing wrong.”

A spokesman for the Office of Congressional Ethics denied politics played a role in the creation of the report or its release.

“Providing info to the public, improving transparency is an essential element of the OCE’s mission. The OCE board’s unanimous vote to release its report on this matter is in letter and spirit a fulfillment of that mission,” said Jon Steinman, communications director.

At issue is $75,000 Deal earned from his disposal business in 2008. According to the ethics report, Deal was issued a W-2 form for the payments in 2006, 2007 and 2008.

Because the income was reported on W-2 forms, it is considered earned income. But Deal listed it as dividend income on his congressional financial disclosure forms.

In his statement, Deal said he had provided money and co-signed a loan prior to 2007 for a business his daughter and son-in-law were starting.

The business did not succeed, and Deal was obligated to pay back the loans. Because of this, he began drawing equity from the salvage business, paid in monthly installments with taxes withheld.

But in October, after the ethics investigation was under way, Deal’s accountant wrote in a letter to Deal and his wife that he recommended Deal amend his tax returns for 2006, 2007 and 2008 to show the income as “passive” or equity income.

“When he started accepting (the equity payments), the business, not knowing the rules, paid him as if they were paying a pay check, that is took out taxes and made it as if it were a payroll check,” Blackwood said.

“When this was pointed out to him he immediately corrected that and has submitted his tax returns and reported it correctly to the committee on standards and that has been accepted. That’s in the report. He has never hidden the money he received from Gainesville Salvage and Disposal.”