Congressional investigators have accused former U.S. Rep. Nathan Deal of violating House ethics rules for earning too much outside income and of using his office to protect a lucrative state program that earned his company hundreds of thousands of dollars a year.
The Office of Congressional Ethics on Monday made six allegations that Deal, a Republican candidate for governor, violated House and federal government ethics rules in a report that also raises questions about attempts by Lt. Gov. Casey Cagle to influence officials at the state Department of Revenue. The report could have major implications in a crowded Republican primary for governor, where Deal has been running in the top three in most polls, behind Insurance Commissioner John Oxendine and former Secretary of State Karen Handel.
Deal's campaign called the report part of a "witch hunt" by Democrats out to hurt his campaign.
But the ethics office said it is "undisputed" that Deal "took active steps to preserve a purely state program, one that had generated financial benefit for Representative Deal and his business partner."
The 138-page report comes about seven months after The Atlanta Journal-Constitution first reported in August that Deal on three occasions in 2008 and 2009 met with state leaders to question changes the Department of Revenue wanted to make in the way Georgia inspects salvaged vehicles. The AJC found that Deal's chief of staff at the time, Chris Riley, used congressional e-mail to contact state officials to discuss the plans and to set appointments for Deal.
Deal and a business partner, Ken Cronan, own and operate a salvage business in Gainesville, which for 20 years enjoyed a lucrative agreement with the state that earned the company $1.5 million from 2004 through 2008, according to state records. Deal and Cronan left the state business after changes were made late last year to open the program up to more competition.
The ethics office's report alleges that Deal violated House rules by failing to disclose all the required information about his involvement in Gainesville Salvage & Disposal, by personally intervening with state officials to protect his business and by violating limits on how much members of Congress can earn from outside sources.
Deal's tax returns from 2008 show he was paid $75,000 in wages by his salvage business, while congressional caps limit outside income to $25,830. Ethics investigators write in the report that Deal might have violated a House rule against compensation from "any source, the receipt of which would occur by virtue of influence improperly exerted from his position in Congress."
Deal has said he has done nothing wrong and told the AJC in August that he met with state officials because he was concerned that changes Revenue Commissioner Bart Graham wanted to make to the system would jeopardize public safety.
In a statement to the AJC from his campaign Monday, Deal said the report is the result of a "political witch hunt fueled by Democrats."
"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," the statement said. "That’s because Nathan Deal did nothing wrong. This is a business Nathan was involved with before he went to Congress and was approved by the House ethics committee every year. There were never any tax dollars involved and there was never a contract with the state of Georgia.
"This is an attempt by Nathan’s political opponents to drag his good name through the mud. The complaint was brought by a liberal, George Soros-sponsored group, fueled by the Democrat Party of Georgia. The only shred of truth in this political attack is that an innocent accounting error was made and subsequently corrected."
The Office of Congressional Ethics is overseen by three Republicans and three Democrats, none of whom currently serve in Congress. The board voted unanimously to release the report on Deal's activities. The OCE serves as a kind of grand jury for the U.S. House Committee on Standards of Official Conduct, which is made up of sitting members of Congress. If the OCE finds reason to believe violations occurred, it refers the case to the Committee on Standards, which can investigate further, punish members of the House or dismiss the allegations.
Deal resigned his House seat late March 21, after the vote on the Democrats' plan for national health care reform. The following day was the deadline for the Committee on Standards to announce whether it would seek action against Deal. But, because he resigned, he is no longer under the committee's jurisdiction and faces no punishment.
Deal's claim that the OCE's report is incomplete is based on the fact that Cagle, the lieutenant governor who was present for some of the meetings with Deal and state officials, would not cooperate with their investigators, and that Graham, the revenue commissioner, said he could not divulge some information without a subpoena because of privacy laws protecting taxpayers.
The report notes that OCE investigators said both Cagle and Graham should be subpoenaed by the Committee on Standards.
Deal's accusation against the original complaint centers on the fact that government watchdog group Citizens for Responsibility and Ethics in Washington originally filed the complaint. CREW, which has filed complaints in Congress against Democrats and Republicans, is a nonpartisan not-for-profit, and has received contributions from an organization created by Soros, a Democratic financier. Georgia Democrats, following the AJC's original reporting, have called for an investigation as well.
In a follow-up message to the AJC, Deal's campaign said the $75,000 he was paid by his salvage business was mistakenly reported on his tax returns as wages when it is actually a dividend, or unearned payment, as reported on his personal financial disclosure with the U.S. House. The campaign said Deal filed amended tax returns correcting the error made by an accountant.
The only likely ramifications for Deal over the OCE's findings will be political, as voters direct the fallout in the July primary. But Melanie Sloan, the executive director of CREW, said that's not enough.
Deal "shouldn’t be able to dodge responsibility for his misconduct by hightailing it out of Congress before he could be held accountable," she said. "Although the House ethics committee no longer has jurisdiction over him, the Justice Department certainly does, and the OCE’s report should be enough to start a criminal inquiry.”
Deal started his campaign for governor as the favorite of much of the state House leadership. At the start of 2010, he was behind only Oxendine among the Republicans in terms of fund-raising.
However, Oxendine, with $2.2 million in the bank, had more than twice as much in his campaign war chest. Former Senate leader Eric Johnson, another Republican candidate, also had more campaign money as Deal had already spent half of what he’d raised.
University of Georgia political scientist Charles Bullock said the congressional report won’t help Deal’s case as he fights to separate himself from the GOP field.
“I think this is a 10-car pileup,” Bullock said. “Here you’ve got a congressional panel staffed equally by Republicans and Democrats, and they say what you did was wrong. That makes it harder to ignore or easily explain away."
Several of the top gubernatorial candidates declined comment on the congressional report.
Ben Fry, campaign manager for Johnson, said, “These are serious charges that voters will be considering in the primary.”
Another Republican candidate, state Rep. Austin Scott (R-Tifton), said he’s never done business with the state or had a state contract. “I believe ethics will be the key issue in this election, and our party has to take a strong look at who can beat a Democratic challenger in November.”
On the Democratic side, House Minority Leader DuBose Porter (D-Dublin), a gubernatorial hopeful, was more critical.
“We’re getting to know the real Nathan Deal,” Porter said. “He obviously used his office to have access to things that benefited him personally.”
Another Democratic candidate, former Adjutant Gen. David Poythress, said, “Restoring the people’s faith in our elected officials and our government is critical to getting Georgia back on track.”
The report means Cagle, too, could face questions over his role.
"The OCE requested, but was unable to conduct, interviews with the Georgia lieutenant governor, former members of his staff, and current members of his staff because the lieutenant governor refused to cooperate with the OCE investigation," the OCE report says, adding that Cagle's office provided some information on Cagle's presence at the meetings.
The report says Cagle's office responded "that because the lieutenant governor is a member of the Georgia state Legislature, any meeting relating to his legislative branch duties would not be discussed due to restrictions under the Georgia Constitution and Georgia state law."
According to ethics investigators, Graham, the state revenue commissioner who oversees the salvage inspection program, told them Deal requested a state salvage inspector be permanently assigned to his business and that Cagle agreed. Graham also told investigators that Cagle said there was "no need" for the state to request bids for additional inspection stations.
“Today’s report conveniently omits the dozens of interactions between my office and the OCE," Cagle said Monday in response. "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. Simply put, we’ve given them everything we have to give them.”
Carol Porter, DuBose Porter's wife and a Democratic candidate for lieutenant governor, questioned Cagle's refusal to meet with ethics investigators. "Once again, we find an elected Republican leader at the center of the culture of corruption," she said.
Staff writer James Salzer contributed to this article.
Ethics report on Nathan Deal
Details of the six accusations brought against the former congressman and current candidate for governor:
- Deal was accompanied to meetings with state officials by his chief of staff, who also used a House e-mail account to send messages related to the meetings. Thus, the report says, "there is substantial reason to believe Representative Deal violated the House Ethics Manual's prohibition on using House equipment and resources for personal business purposes."
- Deal sought to preserve the inspection program "that had generated significant personal financial benefit for him and a business partner" in a manner that may violate House rules against receiving compensation from "any source, the receipt of which would occur by virtue of influence improperly exerted from his position in Congress."
- Deal's tax returns from 2008 show he was paid $75,000 in wages by his salvage business, but he lists $50,001 to $100,000 in unearned "dividends" income on his congressional financial disclosure statement. "Thus, there is substantial reason to believe Representative Deal violated the House Ethics Manual's directive to disclose all earned income," the report says.
- By earning $75,000, the report says, "there is substantial reason to believe" Deal violated the $25,830 limit on how much members of Congress can earn from outside sources.
- Deal is listed on state records as being the corporate secretary of the salvage business, which, the report says, provides "substantial reason to believe" he violated House rules barring members from receiving compensation as a corporate officer.
- Deal also failed to disclose his status as a corporate officer on his financial disclosure forms, the report says, giving "substantial reason to believe" he violated the House Ethics Manual's requirement to disclose all nongovernmental positions.
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