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Jewish World Review Feb. 13, 2000 / 20 Shevat 5761

Evan Gahr

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Consumer Reports

Operation PUSH back -- AFTER YEARS of pushing most every government program imaginable, the Rev. Jesse Jackson has discovered a downside to accepting money from Uncle Sam. Jackson two Sundays ago expressed concern that the President Bush's faith-based initiative could compromise the integrity of black churches. "I am for faith-based programs, after-school programs, senior citizens program, transportation ministries. But I fear federally-funded faith based initiatives," Jackson declared in a fiery address to parishioners at the Ebenezer AME Church in Fort Washington, Maryland. "Don't let them get into your books, because they are wolves in sheep's clothing. Money is seductive; the church needs money, but it needs independence even more."

Ah, the government-fostered "culture of dependency." Isn't that just what conservatives decry and Jackson implicitly accepts when the issue is welfare payments or food stamps? Once upon a time, Jackson had no compunction about accepting government money. In the 1970s, his supposed educational organization for minorities received millions of dollars from at least three different federal departments.

Has the poverty pimp suddenly gone chaste? Or is Jackson merely a shrewd political player who, once again, hopes to pre-empt government investigations into his own quasi-religious non-profit empire?

Jackson certainly has good reason to keep the government wolves at bay. Speculation abounds that his own charitable tax-exempt organization improperly disbursed money to the woman with whom he fathered an illegitimate baby. Did Karin Stanford, a former employee of Jackson's Rainbow/PUSH Coalition, obtain a sweet deal when she moved to Los Angeles with the baby?

At least $35,000 was disbursed to Stanford from Jackson's Citizenship Education Fund (CEF). She was reportedly even authorized by a top Jackson aide to use the money to buy a $365,000 house in Los Angeles.

It is not quite clear for just what Stanford received the money. Was it consulting? Moving expenses? New York Post columnist Rod Dreher notes there are also unanswered questions about other expenditures by the CEF, which boasted $9.9 million in revenues in 1999. The CEF spent more than one million dollars on consulting fees that year. But it ignored requirements to list its five biggest independent contractors on disclosure forms filed with the government.

Some critics, such as Fox News gabmeister Bill O'Reilly, suggest that Jackson is getting kid glove treatment on account of his race and politics. The IRS does not disclose ongoing investigations. But, as far as the press can tell, Jackson's non-profit empire has not faced increased scrutiny because of the new disclosures. In fact, the last known federal audit of a Jackson operation took place in 1993.

Is the federal government scared to touch Jackson for the kind of stuff that could easily lead conservatives in hot water? Lately, the IRS has been accused of singling out conservative organizations, such as the Heritage Foundation, for audits. The Cato Institute even found that residents of states which voted heavily for Bill Clinton are less likely to be audited.

The alternative explanation here is that the government lacks a compelling reason to investigate Jackson. An expert on non-profit organizations tells TheAmerican Spectator the payments to Stanford could be legally justifiable, however unseemly they may appear. The appropriate standard is who precisely benefits from the payments. It is impermissible under federal law for tax exempt organizations to divert funds for the benefit of an individual employee. In other words, Jackson can't use the federal money to meet his child support obligations. But expenditures that benefit his entire organization are justifiable. Yes, that even means "hush money," the expert insists. The payments would be technically legal if they were intended to keep Stanford from suing for sexual harassment or otherwise embarrassing Jackson's organization. "That is a standard way of doing business" in our litigious age, says the expert, who spoke on the condition of anonymity and is certainly no fan of Jackson or otherwise PC.

Moreover, if it only cost the Rainbow Coalition $35,000, to keep Stanford out of the courts or out of a publisher's office hawking a tell-tale book, then what a bargain. Still, all of this is highly theoretical, it should be emphasized. The legality of the arrangement hinges on the details of the contract. Who authorized it? What did Stanford do with the money? If she "used it to buy lingerie" there could be a problem, the source says. Were there any other payments? And who authorized the deal? Jackson should "make everything public and prominent and not hide it from the IRS," the source contends.

But Suffolk University Law professor Charles Rounds, Jr., an expert on trusts, both public and private, tells TAS even the "hush money" argument is not exculpatory. "Giving out hush money with charitable assets, apart from the self dealing problem, is imprudent to say the least."

No wonder that Jackson and his associates have so far dodged questions on the matter -- and suggested further inquiries are improper. Witness Jackson's sermon at the Fort Washington church. Perhaps Jackson's newfound skepticism for government, particularly government investigators, is a not very subtle warning to Uncle Sam to stay off his back.

In the past, Jackson has refused to tell the government how he spends taxpayer dollars -- or even reimburse Uncle Sam for questionable expenses. In the 1970s and early 1980s, PUSH-Excel, an off-shoot of Jackson's PUSH, parleyed its supposed mission to help minorities into at least $5.6 million in federal grants. But PUSH-Excel "was little more than a series of speeches made by Jackson and others," according to an independent report commissioned by the Education Department, the Associated Press reported in 1981.

In 1983 the Education Department said at least $1.3 million in grants to Jackson's PUSH-EXCEL lacked "supporting documentation and/or definitive allocability to project activities." The Reagan administration subsequently cut off federal funding. Jackson has since found corporate America much easier to shake down -- no questions asked or answered. Stonewall Jackson rides again.

JWR contributor Evan Gahr is senior fellow at the Hudson Institute. To comment click here.


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© 2001, Evan Gahr Adapted from the American Spectator's online edition