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Video: New details on Gingrich campaign mutiny

Image: Newt Gingrich
Justin Sullivan  /  Getty Images
Republican presidential candidate Newt Gingrich speaks during the 2011 Republican Leadership Conference on June 16 in New Orleans.
By Michael Isikoff National investigative correspondent
NBC News
updated 6/22/2011 6:43:17 PM ET 2011-06-22T22:43:17

For Newt Gingrich, there is no end to the bad news.

But Tuesday’s report in the Washington Post  that he will soon have to report another large revolving line of credit  to Tiffany and Co. may have been especially cruel.

The reason: Gingrich misunderstood the financial disclosure rules for presidential candidates and mistakenly believed it would never have to become public, according to three current and former campaign advisers.

The advisers, who spoke on condition of anonymity, said Gingrich had purchased jewelry from Tiffany & Co, for years and long had a regular interest-free line of credit with the upscale jewelry store.

That line of credit ballooned late last year to between $500,000 and $1 million when he bought his wife, Callista, a diamond necklace, the advisers said.  

But  Gingrich and his wife initially believed that the line of credit — and the enormously expensive necklace — would not have to be reported because he had paid off the debt, one of the advisers said.

Gingrich’s campaign lawyer, Stefan Passantino, subsequently informed him that their assumption was wrong: that any line of credit would have to be publicly disclosed as a liability on the disclosure form that all presidential candidates are required to file with the Federal Election Commission, according to the adviser, who added, “It was a shock to the Gingriches.”

Gingrich: Issue is irrelevant
Both Passantino and Gingrich’s campaign spokesman, Joe DeSantis, declined to comment about the internal discussions within the campaign.  Gingrich has brushed away questions about the  Tiffany disclosure, insisting the issue is irrelevant to his candidacy.

“People should be free to spend their own money the way they see fit,” Gingrich said last month. 

Still, the new flare-up over Tiffany jewelry was yet one more distraction for Gingrich’s floundering campaign, and raised anew questions about some of his previous statements.

Read more reporting by Michael Isikoff in 'The Isikoff Files'

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After the initial reports that he and his wife had a line of credit with Tiffany five years ago of between $250,000 and $500,000, Gingrich said on CBS’s “Face the Nation” on May 22 that his interest-free debt to the jewelry store had been paid off and that the line of credit was a “normal way of doing business.” He made no mention of a second line of credit of up to $1 million.

“All I’m telling you is we are very frugal,” Gingrich said.  “We in fact live within our budget. We owe nothing.”

Gingrich’s senior strategists immediately recognized they had a problem: the claims of frugality would be difficult for most voters to reconcile with hundreds of thousands of dollars in Tiffany purchases, the campaign sources said.

They also knew that the issue would come back to haunt them in June, when Gingrich’s disclosure form covering his finances between Jan. 1, 2010, and May 15 of this year was due to be filed. “They knew there would be another shoe to drop,” said one of the advisers.

'He lives within his means'
Asked Wednesday how Gingrich could square his claims last month that he and his wife were “very frugal” with the new disclosures of a $500,000 to $1 million line of credit with Tiffany, DeSantis, the campaign spokesman, said there was no contradiction.

“He lives within his means,” he told NBC. 

The looming threat of a new wave of Tiffany’s stories was one of the multiple reasons that caused 16 top campaign advisers, including his campaign manager,  to resign from Gingrich’s campaign two weeks ago, according to the campaign sources. (Gingrich’s two top fundraisers also resigned this week.)

The Tiffany issue  reflected larger problems that the advisers said they had with Gingrich’s campaign — his lack of discipline, his refusal to make enough time for fundraising, Callista Gingrich’s insistence on budgeting time for screenings of movies done by the couple’s for-profit production company, and the candidate’s decision to take a two-week cruise of the Greek islands just a few weeks after announcing his candidacy.

As the advisers tell it, Gingrich’s misunderstanding of what the campaign disclosure laws required became just one more problem that was added to the list.

© 2013 NBCNews.com  Reprints

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