House ethics office investigation advances

A House ethics office has initiated a second stage of its investigation into the fundraising activity of five Republicans and three Democrats, according to staffers close to the probe.

The House Office of Congressional Ethics (OCE) in the last 48 hours has sent at least four of the eight members letters notifying them that it has decided to extend the probe beyond its initial 30-day stage, known as a preliminary review.

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Rep. John Campbell (R-Calif.), one of the eight lawmakers, acknowledged the second-stage notice through his spokesman and pledged to continue to cooperate fully with the inquiry.

“We have been notified by OCE that they are continuing their audit,” Campbell spokesman Brent Hall said in a statement. “We have readily provided all information requested, and we will continue to cooperate fully. We anticipate a favorable resolution of the matter at their earliest convenience.”

A Democratic aide requesting anonymity also acknowledged that the office had received the latest OCE notification and said other offices also received the same letter.

The other lawmakers under OCE scrutiny are: Joseph Crowley (D-N.Y.), Jeb Hensarling (R-Texas), Chris Lee (R-N.Y.), Frank Lucas (R-Okla.), Earl Pomeroy (D-N.D.), Tom Price (R-Ga.) and Mel Watt (D-N.C.).

The OCE does not confirm or deny the existence of specific investigations and is prohibited from commenting about them.

The stakes are high for the lawmakers and the OCE. The lawmakers have their political reputations to worry about and re-elections. The OCE’s decision to take the probe to a second stage comes as some Congressional Black Caucus (CBC) members have proposed legislation to revamp the ethics office.

Government watchdog groups have lambasted the CBC bill, introduced by Rep. Marcia Fudge (D-Ohio), but Speaker Nancy Pelosi (D-Calif.) has said she “respects” the CBC’s frustrations with the OCE and will take a look at its rules in January at the beginning of the 112th Congress.

None of the eight members has previously been involved in ethics controversies, and the OCE decision to advance the investigation to a second stage may have little, if any, bearing on the actual merits of allegations against the lawmakers. The ethics office has just 30 days to gather material and make an assessment in the first stage.

As of late this week, investigators were still gathering documents from member offices from its initial request, according to several sources close to the probe.

In the second stage of the review, the OCE has 30 more days to look into the matter, with an option of extending that to 45 days. In order for the matter to advance to that next level there has to be “probable cause to believe allegations,” a slightly higher threshold than the “reasonable cause” required for a preliminary review.

The third stage, which would necessitate referral to the House ethics committee, is defined as “substantial reason to believe allegations.”

The OCE initiated this preliminary review on May 24, according to its June 1 letter to K Street officials.

The OCE is investigating these eight lawmakers for fundraisers they held within days of a vote on the financial regulatory reform bill that passed the House in December.

While the OCE operates in secret, members and other witnesses can openly discuss the matter. Last week, one day after The Hill reported that the OCE had asked lobbyists for detailed fundraising information on the eight members, more details emerged. As part of the probe, the OCE is reviewing an amendment offered by Rep. Mel Watt (D-N.C.), which was withdrawn within two days of fundraiser held in his honor.

Last October, Watt sponsored an amendment that would have included auto dealers under the oversight of a proposed finance industry watchdog, a position supported by several consumer advocacy groups.

The proposed Consumer Financial Protection Agency would oversee companies that provide auto financing, and used-car dealers offering “buy here, pay here” financing.

Without Watt’s amendment, franchised auto dealers would be exempted.

Watts withdrew the amendment on Dec. 11, two days after a fundraiser for him at the Democratic National Committee headquarters.

In a statement, Watt said it was unfortunate the investigation was leaked to the press, because this could “leave the impression that there has been some impropriety.” He said he would not comment until the investigation was completed, “except to assure the constituents and the public that I am fully confident” the probe will find there was no violation of “either the letter or the spirit of any laws or ethical standards.”

Campbell openly opposed the Watt amendment. After Watt withdrew it, he thanked him on the House floor for working with him and making “a number of suggestions” that “clarified some things that were, frankly, confusing and conflicting in the bill.”

Campbell held two fundraisers just a few days before Watt withdrew the amendment. One was at the National Republican Congressional Committee’s Capitol Hill Club on Dec. 8, and another was a California wine tasting held Dec. 9.

Several financial-services industry PACs contributed to Campbell around that date, including KPMG, Ameriprise, the Mortgage Bankers Association, Credit Suisse Securities, Charles Schwab and Ford Motor Co.

Campbell recently told The Hill he is “baffled” by the OCE investigation and his office has repeatedly stressed that he looks forward to a “favorable outcome.”