Newt Gingrich Charity Paid Cash To Gingrich For-Profit Business

June 14, 2011 — -- A non-profit charity founded by Newt Gingrich to promote freedom, faith and free enterprise also served as another avenue to promote Gingrich's political views, and came dangerously close, some experts say, to crossing a bright line that is supposed to separate tax-exempt charitable work from both the political process and such profit-making enterprises as books and DVDs.

The charity, Renewing American Leadership, not only featured Gingrich on its website and in fundraising letters, it also paid $220,000 over two years to one of Gingrich's for-profit companies, Gingrich Communications. It purchased cases of Gingrich's books and bought up copies of DVDs produced by another of the former House speaker's entities, Gingrich Productions.

"The spirit of operating a non-profit organization is to work for the public good regardless of the politics that are involved," said Daniel Borochoff, president of the American Institute of Philanthropy, in an interview with ABC News. "I believe it violates that spirit."

Asked about the allegations this morning prior to a speech in New Hampshire, Gingrich urged an ABC News reporter to focus on his speech.

"I'm not concerned about that. The American people aren't concerned about that. Try covering the speech," Gingrich said as he left a campaign event. When the reporter tried to follow up, Gingrich got in his waiting car and slammed the door.

ABC News was engaged for weeks in discussions with top Gingrich advisors about money from Gingrich's tax-exempt charity that went to his for-profit businesses -- known as related-party transactions -- which were never disclosed on the charity's tax forms. ABC News found evidence of the payments in a May 2011 audit commissioned by the West Virginia secretary of state's office. Many of ABC News's questions remained unanswered last week when Gingrich's presidential campaign team resigned en masse, citing dismay with the candidate's lackluster approach to his bid. Questions were resent to Gingrich's new team, but they did not generate a reply by the time of publication.

Tuesday afternoon, the Gingrich campaign released a statement saying the ABC News report "did not find any activity that was not fully supported by the law."

"That's because both [Renewing American Leadership] and Gingrich Communications took great care to make sure all resources were being used legally and ethically," the statement says.

One of those who quit the campaign, longtime Gingrich spokesman Rick Tyler, told ABC News in a series of email exchanges prior to his resignation that the charity spent no money on political activity and "did nothing to promote anyone's political career." Tyler also revealed that he personally was the beneficiary of the six-figure payments the charity made to Gingrich Communications – money he was paid to run the charity until he began helping prepare Gingrich for a presidential bid.

The blending of charitable and political activity has been a touchy area for Gingrich. In the late 1990s Gingrich became the first sitting House Speaker to be censured and fined by the House Ethics Committee after being accused of drawing money from a tax-exempt organization to help finance his political activities. The IRS later cleared him on the charges, but not before the House ordered him to pay a $300,000 fine.

Since leaving the speakership, Gingrich has built an elaborate conglomerate of businesses and political organizations that have all worked in concert to promote his ideas, sell his books, and keep him in the mix of political figures who shape conservative ideology and messaging. The profit-making portion of the Gingrich empire has helped him amass enough wealth to buy a $1 million home in suburban Washington, D.C., and have a now-infamous $500,000 line of credit at Tiffany's.

It is often difficult to tell where the work of one Gingrich entity ends and where the work of another begins. For instance, money raised by a political group he founded, American Solutions, paid for millions of dollars worth of charter jet flights Gingrich took to crisscross the country promoting the movies of his production company. He made paid public speeches that helped fill the accounts of his communications firm and promote the ideas developed by yet another business, a for-profit think tank called the Center for Health Transformation.

Charity Watchdog: Business 'Must Be Disclosed'

His wide range of activities appears to have been effective in making Gingrich money and infusing his ideas into public discourse. Some of this activity is disclosed in publicly available documents -- money donated to and spent by the political organization American Solutions is all chronicled in public IRS filings. Borochoff said Gingrich was not legally required to disclose the payments from the charity to his consulting firm because, while his name and image were peppered throughout the charity's materials, and he was identified as its founder, he never took a formal seat on its board. Instead, the charity's board was led by Tyler, who was then serving as Gingrich's personal spokesman.

"If you're a director and you're doing business with the charity, it has to be disclosed, these are federal requirements," Borochoff said. "But the fact that [Gingrich] is not a director or an employee, he can skirt those disclosure rules. He doesn't have to disclose if he's selling things to the charity or receiving money from the charity."

Tyler said he never asked Gingrich to join the charity's board because he "did not want to use any more of Newt's time," not because he was attempting to avoid any disclosure requirements.

Gingrich declined repeated requests to be interviewed by ABC News. Tyler responded to questions sent by email but did not provide a formal statement, other than to write that he did not want to participate in this report because he believed the network was "pursuing a piece that intends to deliberately malign the Gingrich family of businesses and the people who work for them."

ABC News did, however, speak for more than an hour with Jim Garlow, the San Diego pastor who agreed to take over the reins of the charity in March, when Gingrich started taking formal steps to launch his bid for the White House. Garlow said Renew American Leadership, or ReAL, was founded three years ago to try to study and address the nation's troubles using Christian principles, and any ancillary benefits that came to Gingrich were inconsequential. Asked if the charity was intended in any way to serve as a stalking horse for Gingrich's future presidential campaign, Garlow said he doubted that.

"I don't think so," Garlow said. "I think he's very concerned about those issues. I heard him speak on numerous occasions, and I think he, like many Americans, including me, is very concerned with the direction of this nation. And Renewing American Leadership is one of many organizations out there attempting to address what we see as some significant drift in our nation that concerns us deeply."

Garlow said Gingrich's timing also indicated the charity was not set up to promote his presidential ambitions. "If he had announced for the presidency at that time [he had formed the charity], and been running at that time, then that would be a conflict of interest," Garlow said. "And that's why the organizations are absolutely separated right now."

The charity's tax forms indicate it has raised more than $2 million, mostly from small checks sent in response to mail solicitations. ABC News obtained samples of two different mass mailings -- requests for contributions written on Newt Gingrich letterhead and signed by the former speaker. Both letters quoted President Obama saying that America is "no longer a Christian nation" and called on donors to help Gingrich restore Christian principles in Washington. (The quote, from a 2006 Obama speech, is accurate, though the web site Factcheck.org called it misleading for Obama's critics to use the partial quote. What Obama said was, "Whatever we once were, we are no longer a Christian nation -- at least, not just. We are also a Jewish nation, a Muslim nation, a Buddhist nation, and a Hindu nation, and a nation of nonbelievers.")

The fundraising mailers, along with the web site, represent the bulk of Renew American Leadership's efforts to fulfill its non-profit mission of educating the public about the need for more religious discussion in the public arena. Garlow told ABC News he is hoping to devote more of the charity's resources to pastor training and other outreach programs, though those efforts are still in their early stages.

The thousands of dollars spent by the charity developing a mailing list with the identities and contact information for people who respond favorably to Gingrich's appeal could have ultimately helped Gingrich the presidential candidate. The list of people who responded to Gingrich's appeals by sending checks to the charity was provided to Gingrich for his future use, Tyler confirmed. Any time Gingrich signs a fundraising appeal for someone, they "must share names of donors who respond," Tyler said.

Gingrich Publisher Charged Charity 'Full Price' For His Books

Borochoff, the charity watchdog, called the notion that the charity could have handed Gingrich any part of its fundraising list an abuse.

"If in fact Mr. Gingrich is receiving [Renewing American Leadership's] list for free then this is an abuse of the American charitable organization system," he said. "Charitable organizations are not allowed to intervene in political campaigns. Generating and then giving away a list of donors, who support and share the views of a particular political candidate is a misuse of tax-subsidized, charitable resources."

Garlow said the $220,000 in payments the charity made to Gingrich Communications went not to Gingrich but to Tyler for running the day-to-day operations of the organization -- "reimbursing what he was giving to ReAL during that time, which was a lot of hours. He worked hard on it." Renew American Leadership's tax forms report that Tyler worked 20 hours-a-week at the charity and had no reportable compensation. Tyler said the payments were channeled through Gingrich's consulting firm to insure Tyler was provided health insurance.

Garlow said he did, however, complain to Tyler about having to pay "full price" for Gingrich's books and DVDs, noting that he has always been able to negotiate a steep discount when his church buys copies of his own books. "My concern was, 'Is there any way we can get these a lot cheaper?'" Garlow said. "And we couldn't, and we didn't."

Joe DeSantis, communications director for the Gingrich campaign, said Tuesday, "The only books that were sold by Gingrich Communications to ReAL were sold 'at cost' at the same discounted publisher rate at which Gingrich Communications purchased them."

Since Gingrich first began running for president, the various organizations he launched have faced greater scrutiny. There have been published reports about his extensive use of charter jet service, paid for by donors to his political organization. And there has been discussion of the sizeable contributions -- several million dollars -- Gingrich's political organization received from Las Vegas casino billionaire Sheldon Adelson. While gambling can be controversial within some circles of conservative religious voters, Adelson and Gingrich have long seen eye to eye about the country's Israel policy.

Ellen Miller, co-founder of the Sunlight Foundation, told ABC News she was surprised to discover that, in addition to all his other for-profit and political ventures, Gingrich was back in the charity business, given the ethics issues he had encountered with charity work more than a decade earlier.

"The fact that Newt Gingrich was censured for mixing political and public education type activities is what makes the founding of this organization particularly odd," Miller said. "You'd think he would learn from previous experience, which didn't turn out very well for him."

Garlow told ABC News he is a strong supporter of Gingrich and does not want to see this charity lead Gingrich back into that ethical thicket. He said he has taken pains to untangle Renewing American Leadership from Gingrich's involvement to avoid the appearance that it is endorsing his candidacy. When asked by ABC News last week why the charity continues to advertise Gingrich's books in banner ads on its website, Garlow said that was a mistake. The ads were removed the following day. Similarly, Gingrich's full-throated endorsement of Rep. Paul Ryan's economic plan, posted on the web site after Gingrich was criticized from the right for referring to the Ryan plan as "too big a jump" and "right-wing social engineering" was also pulled down after Garlow's ABC interview.

When Gingrich's staff left him in large numbers last week, one concern they raised was his lack of vigor on the campaign trail and his decision to cut away so soon after he launched his bid for a Greek cruise. But that vigor has not been lacking from his efforts to promote his books and movies. His first scheduled event back in public last week came in New Hampshire -- it was the screening of a movie produced by Gingrich Productions. Today, Gingrich's publisher is releasing his latest book.

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