Washington in brief: SENATE INVESTIGATION GOES HARD ON ABRAMOFF NONPROFITS

Jerry Reynolds
10/25/06

A third congressional investigation on former lobbyist Jack Abramoff’s misdeeds has detailed a case for criminal tax fraud and abuse of tax-exempt status among conservative nonprofit organizations that did the criminal ringmaster’s bidding.

The Senate Finance Committee notes, near the end of the narrative portion in a 600-page report, that it will turn over its findings to the Internal Revenue Service, the Department of Justice and the Treasury Department, organizations with full subpoena powers and the staffing to extend the investigation. Democratic staff on the committee drafted the report at the authorization of Sen. Charles Grassley, R-Iowa, the committee chairman.

According to committee findings, Abramoff’s stable of nonprofit organizations received payment for three primary activities: writing articles and editorials that favored Abramoff clients, receiving funds from Abramoff or his proxies and channeling them to his allies on various projects in a manner that concealed the source of funds (an arrangement referred to as “pass-through” funding in the report) and introducing Abramoff clients to prominent officials in Washington. A hefty measure of the money that lubricated Abramoff’s lobbying operations came from casino tribes.

The most prominent organization in the report is Americans for Tax Reform, headed by Republican heavyweight Grover Norquist. Norquist is alleged to have offered ATR as Abramoff’s “pass-through” for anti-Indian gaming funds, in return for a share of the sum passed through his organization. The practice is standard in the nonprofit sector, but by law the funds that are passed through without tax, as well as the untaxed cut that is kept as a so-called pass-through fee, must pertain to those purposes for which the pass-through organization has been granted tax-exempt status.

The IRS grants tax-exempt status in recognition of charitable purposes, or more narrowly, work with a beneficial intention toward the public at large. At one point, the committee asserts, “A strong case can be made that the ‘pass through’ of anti-gambling funds was not related to ATR’s exempt purpose, and that it constituted a trade or business regularly carried on by ATR.”

Norquist has denied wrongdoing, along with the other organizations identified in the report: the Council for Republican Environmental Advocacy, Citizens Against Government Waste, Toward Tradition, and the National Center for Public Policy Research.

Rehabilitated Ney
pleads guilty

Fresh from treatment for alcoholism, Rep. Bob Ney pleaded guilty Oct. 13 to accepting bribes in return for official acts and other crimes that trace back to the activities of former Republican lobbyist Jack Abramoff. Pursuant to a plea bargain with federal prosecutors, Ney is expected to receive at least a 27-month prison term.

Among Ney’s guilty deeds were several on behalf of Abramoff client tribes. Abramoff, who awaits sentencing on his own guilty plea, ultimately garnered something north of $60 million from tribes he represented. Ney also accepted $50,000 worth of poker chips from a foreign businessman hoping for tax breaks from Congress, and various trips valued at $170,000.

Ney, a Republican, previously decided not to run for re-election in Ohio’s 18th district. But barring an official action against him in the House of Representatives, he retains his seat until a new member is sworn in. Through attorneys, he has announced that he will resign his seat before he is sentenced on Jan. 19. Republican leadership in the GOP-majority House has vowed to expel him as a first order of business in the so-called lame duck session of Congress following the Nov. 7 midterm elections.

In the meantime, Ney’s case has become one more downstroke in a steady tattoo of bad news for Republicans that has sent GOP poll numbers crashing as they seek to maintain majority-party control in Congress. In Ohio, where Ney’s downfall is only the most nationally prominent of Republican political scandals, recent polling has shown a pronounced surge toward Democratic candidates.

Democratic leader Reid rivals GOP counterpart in ethics department

The Senate’s top Democrat has been exposed reaping $1.1 million in a land deal that wasn’t properly disclosed to Congress. The complex acquisition, transfer and sale obscured the lawmaker’s holdings and misrepresented the source of his windfall.

Sen. Harry Reid, D-Nev., the Senate Majority Leader, has been denying wrongdoing and berating the Associated Press reporter who broke the story ever since. AP quoted a former Federal Election Commission overseer of federal candidate disclosure forms who said Reid violated a clear Senate rule on disclosure.

Reid’s land venture parallels that of Rep. J. Dennis Hastert in the House of Representatives, even down to an Indian presence at the margins of their misconduct. Hastert, an Illinois Republican and Speaker of the House, took in more than $2 million on land that spiked in value after Hastert, in his official capacity, secured funding for a “Prairie Parkway” transportation project west of Chicago. At about the same time, he staged a show of distemper still renowned in Capitol Hill corridors when an out-of-state tribe tried to plant a casino on the parkway perimeter. Months later, an absent Hastert authorized a statement from himself on the House floor in favor of a bill that would have prohibited tribes from crossing state lines in search of casino sites. The bill failed, but the conventional wisdom is that as Speaker of the House, Hastert will have a better chance than most lawmakers of settling a problem in his home district during the so-called lame duck session of Congress in November.

Like Reid after him, Hastert has denied wrongdoing.

The deal-making channels that obscured Hastert’s gains were even more complex than in Reid’s case. For the Nevada lawmaker, at the current stage of investigation anyway, the Indian presence appears more distant. But it is certain that while Reid was sitting on an undisclosed Nevada property, the sale of which would net him a $700,000 gain in 2004 after factoring in a $400,000 purchase price, he was steering to final passage a bill for the forcible distribution of treaty-protected Western Shoshone lands.

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