John McCain's favorite charity?: The Swamp
 
The Swamp
-

Group muddies McCain's message: Nonprofit bent rules backing his agenda.

Posted June 17, 2008 7:15 AM
The Swamp

by Andrew Zajac

In 2001, John McCain helped found a northern Virginia think tank that has frequently taken policy positions that dovetail with his and provided paychecks to key political associates.

The Reform Institute also has bent and may have broken rules governing non-profits, including one that requires charities to disclose their donors to the IRS.

The institute's fundraising and disclosure practices at times conflicted with McCain's political profile as a champion of transparency and an enemy of special interests.

McCain gave up the chairmanship of the institute's advisory committee in 2005, but more than a dozen Reform Institute employees, directors and advisors have found their way to the McCain presidential campaign.

They include McCain's campaign manager, Rick Davis.

See the story on the institute from this morning's Chicago Tribune:

By Andrew Zajac
Washington Bureau
WASHINGTON -- Allies of Sen. John McCain opened a Washington think tank in 2001 to promote transparency and accountability in government, a signature issue for the Arizona Republican after his presidential primary loss to George W. Bush.

For the next seven years, the non-profit Reform Institute churned out position papers and offered expert testimony on campaign finance reform, the need for bipartisanship and other issues, frequently supporting McCain's positions.

But behind the scenes, the institute's practices have at times arguably been at odds with its reformist message, and with McCain's political identity as an enemy of special interests. In fact, the Reform Institute has stretched and may have broken rules governing charitable organizations, according to tax law experts.

The institute has twice omitted the names of donors in IRS filings. IRS rules require that charities identify their contributors to government regulators.

In 2003 and 2004, a telecommunications company with business before the McCain-led Senate Commerce Committee contributed a total of $200,000 to the institute. The contributions were solicited by Rick Davis, a veteran Washington lobbyist who was president of the institute from 2003 through 2005 and now is McCain's campaign manager.

Davis is among more than a dozen Reform Institute advisers, directors or consultants who have played roles in McCain's 2008 presidential campaign. And while the institute says it is non-political, critics say its agenda has closely mirrored key elements of the McCain platform.

"Even if they didn't say `vote for McCain,' their activities promoted and enhanced McCain," said Frances Hill, director of the program on taxation at the University of Miami Law School. "That is something that a tax-exempt organization can't do.

"There are red flags all over this," Hill said.

Davis declined to comment. In a written statement, McCain campaign spokesman Brian Rogers said that while the institute was set up by people "inspired by Sen. McCain's vision of reform ... its mission was non-political. ... It is false to suggest that the organization was intended to serve any political purpose or confer any political benefit."

Hill emphasized that it is impossible to make a conclusive determination of wrongdoing without a careful review of the institute's operations.

"The question is if there are specific violations here or a really disturbing pattern of, at the very least, an absence of good judgment," she said.

Ensnared in the Keating Five influence-peddling scandal early in his Senate career, McCain became a loud proponent of ethics reform, vowing to break up "the iron triangle of big money, special-interest lobbyists and the legislation they buy."

But McCain, and his presumptive Democratic nominee, Sen. Barack Obama of Illinois, who has ties to the Illinois political establishment, both have struggled to meet the lofty standards they've set for themselves as reformers. McCain has had difficulty squaring his stance as a maverick with a growing number of media reports highlighting the key roles played in his campaign by entrenched Washington insiders.

Five lobbyists recently left senior positions in his campaign, and McCain has imposed conflict-of-interest rules aimed at curbing ties between campaign officials and special interests.

McCain's best-known legislative achievement, the McCain-Feingold campaign reform act of 2002, aimed to choke off the flow of so-called soft money--essentially unregulated contributions from corporations, labor unions or individuals to political parties.

But in aligning himself with the Reform Institute, McCain has benefited from a stream of special-interest funding similar to the soft money he's scorned.

Unlike campaign funds or political action committees, which cannot accept money directly from businesses and can accept only limited amounts from individuals, the Reform Institute, as a charity, can accept unlimited, tax-deductible sums from virtually any source with little public disclosure.

The ability to donate to a non-profit linked to an elected official, with no public reporting requirements, creates opportunities to curry favor, said Bill Allison of the Sunlight Foundation, a non-partisan government watchdog.

"I think the Reform Institute has done some good work," Allison said, but McCain's links to the group "sort of muddies [its] message."

Although not legally required to publicly disclose its donors, the Reform Institute, which had collected $4.8 million through 2006, does post a list of its contributors, with the sizes of contributions in ranges, on its Web site.

But the list is incomplete. It does not include two donors whose identities the institute has withheld even from the IRS, in apparent violation of agency regulations.
Charities like the Reform Institute are required to identify contributors to the IRS so it can verify that the organization qualifies for its tax-exempt status.

In 2003 and 2005, the institute declined to identify a donor unless specifically asked by the IRS, citing the possibility that the agency might mistakenly release the names.

Davis was president of the think tank at the time, but Rogers referred questions about the donations to the institute.

Reform Institute Executive Director Cecilia Martinez said the organization was simply honoring contributors' demands for anonymity.

An IRS spokesman declined to comment on the legality of withholding contributors' names from the agency in any specific case.

The spokesman referred to a section of law stating that a tax-exempt organization "shall furnish annually ... the total of the contributions and gifts received by it during the year, and the names and addresses of all substantial contributors."

Omitting the names of donors is a violation--though it's one the IRS does not vigorously enforce, according to Bruce Hopkins, a Kansas City tax attorney and author of "The Law of Tax Exempt Organizations."

"Technically it's not permissible, but organizations do it and the IRS does not have the resources to do anything about it," Hopkins said.

The 2003 donation, which was in excess of $50,000, came from a Republican elected official who did not want McCain to know that he had given the institute the money, said Martinez, adding that "we have no plans to disclose" either contribution.

From its inception, the Reform Institute's operations have been closely intertwined with McCain's legislative and political ambitions.

Three members of the institute's inaugural four-person board worked on McCain's 2000 campaign. McCain was chairman of the institute's advisory committee from 2001 until 2005, and for most of that time the institute was lodged at the same Alexandria, Va., office building as McCain's Straight Talk America leadership PAC, his Senate campaign committee and Davis Manafort Inc., Davis' lobbying business. Davis currently is on leave from the firm.

Davis collected at least $395,000 in salary and consulting fees during his three-year stint at the institute. Carla Eudy, a key McCain fundraiser, collected $294,000 for serving as a consultant and treasurer. Both Davis and Eudy have acknowledged using McCain's donor lists and name to raise money for and publicize the institute.

In 2005, as McCain mulled another White House bid, he stepped down as chairman of the institute's advisory committee, and Davis also left the group.

The departures occurred "precisely to avoid the suggestion that the Reform Institute had any connection with a possible presidential run," Rogers said.

At the same time, the institute's agenda broadened to include climate stewardship, homeland security and immigration reform--which all would be part of McCain's campaign platform.

A Reform Institute consultant, John Raidt, who formerly worked on McCain's Senate staff, registered to lobby Congress on the McCain-Lieberman Climate Stewardship bill. Raidt, now an adviser to the McCain campaign, was paid $145,000 at the institute.

The departures also followed news accounts highlighting fundraising among the kind of special interests whose influence McCain and the institute professed to want to limit.

At least two large donors to the institute, Cablevision and EchoStar Communications, have had business before the Senate Commerce Committee, headed by McCain from 1997-2001 and from 2003 to 2005.

EchoStar, run by longtime McCain backer Charles Ergen, gave $100,000 to help start the institute in 2001. Cablevision gave the institute $100,000 in 2003 and another $100,000 in 2004 as McCain urged acceptance of a pricing plan sought by the New York-area cable giant, according to a 2005 Associated Press report.

The donations were solicited by Davis from Cablevision Chairman Charles Dolan in May 2003, a week after Dolan testified about the pricing plan before McCain's Senate panel, AP reported. McCain at the time said the donations had nothing to do with his endorsement of Cablevision's pricing proposal.

But the timing of the contributions raises questions both about possible violations of Senate ethics rules and about whether the institute was abusing its non-profit status by cashing in on McCain's public service, according to the University of Miami's Hill.

"Saying `we do not engage in politics' is an attempt to deflect attention from what the organization actually does," Hill said. "The question is `what does the organization actually do,' not its [non-profit] status."

Among the Reform Institute's biggest donors is the Chartwell Charitable Foundation, a philanthropy controlled by A. Jerrold Perenchio, until 2007 the chairman and chief executive of Spanish-language broadcaster Univision, and a national finance co-chairman of McCain's presidential campaign.

Univision was among several broadcasters that employed Vicki Iseman, a lobbyist whose friendship with McCain in the late 1990s prompted a top aide to warn her away lest the relationship undermine his reputation as a foe of special interests.

According to its public IRS filings, the foundation gave the institute $100,000 in 2002 and $375,000 in 2006--about 10 percent of the institute's funding.

For about three years, until fall 2006, Chartwell was included on the Reform Institute's Web site list of donors.

That listing was "in error," said Martinez, the institute's executive director. Even though Chartwell's grants are a matter of public record, its name was removed from the institute's donor list.

"We honored their request for anonymity," Martinez said.


Digg Delicious Facebook Fark Google Newsvine Reddit Yahoo

Comments

It was probably Cindys' money anyway.


Wooo....woooo......

ALL ABOARD! STRAIGHT TALK EXPRESS! NEXT STOP, NOWHERESVILLE!


Looks like McC is just about as honest as Billary is... despite all his hoopla, including his War Hero stuff... he leaves out that he made an anti-
American confession only 4 days into Vietnamese captivity... Hero?


If this is the worst thing David Axelrod--excuse me, Andrew Zajac--can come up with on McCain, then McCain must be squeaky clean.

And as is always the case in the Swamp--the supposedly nonpartisan "expert" commenting on McCain, Prof. Frances Hill, is actually a big time Dem Party activist who gave $1500 to Hillary's campaign, and contributed to Bill Clinton, Paul Tsongas, and other Dems. See http://www.newsmeat.com/fec/bystate_detail.php?zip=20015&last=HILL&first=FRANCES
for the results the Swamp reporter didn't want readers to know.


What about tax-exempt churches which regularly hold political rallies disguised as services for Barack Obama?


What a weak piece of journalism. Not surprising from the lap dogs at the Tribune. Your beloved Senator Obama is in bed with Tony Rezko, one of the sleeziest crooks in recent history and you swallow his lame excuses hook, line and sinker. McCain and his allies form a non-profit to promote issues they believe in (like countless other big-name pols) and you convict him of "muddying the waters." Did you do a simple search to determine that your expert who so strongly accused McCain of wrongdoing happens to be a financial backer of Hillary Clinton? And you even managed to weave in the completely discredited old hit piece from the New York Times. This story is a joke.


McCain's conduct on a routine basis can only be described as questionable.


Not to say that McCain is the best ever, but funny how tribune writes majority negative issues on McCain, but Obama is a Saint and everything he is accused of, the Tribune can justify and spin it into a positive.


Bruce, a total of 6 donations over 16 years makes someone a "big time Dem Party activist"?

What does that make people like Eudy, Perenchio and Ergen?


To all McCain supporters:

Mc Cain is someone who can't even remember what he says from day-to-day. Either he is such a brazen liar that he doesn't care what people think or he is just so mentally incapable that he doesn't realize he is constantly being watched and recorded...

Want a list:

1) He is not like George Bush or he is exactly like George Bush...he's said both, which is true?
2) He said the Iraq war was easy, easy, easy then he said it was never going to be easy and questioned the people who said that. But he was one of them...
Oh hell, just watch the video....

http://www.youtube.com/watch?v=ioy90nF2anI


John McCain is the candidate of choice of the lobbying community. They will support him anyway they can. They know that they will have the best access money can buy to a McCain administration. Look at the guys Mccain has chosen to surround himself with. Davis. Loeffler. Goodyear. The biggest, most powerful and most amoral lobbyists around. They represent foriegn dictators for cash and they love John McCain. They know he's no reformer. They know he's on their side. They know they can count on him to do what they want, when they want, for whatever client pays them.


Mr. Zajak does not cite an instigator for this article, which is 7 years old. Is this what we can expect from the Tribune Wash bureau, an extension of the Obama political campaign? This story is so obviously a timely smoke screen for the Democrats' Senate loan scandal involving Obama's pick of Jim Johnson, which consumed all of about four paragraphs elsewhere in this section and written with the spin of downplaying its significance.


Further in the tank than ever for Obama. Where was Andrew Zajac and the Libune when Jesse Jackson was using non-profit money to pay for his illegitimate child? Where is the Libune TODAY when Obama says he returned all his tainted Rezko money only to "find" more weeks later? You guys are pathetic.
Voters take note, it doesn't matter how many times the NY Times and the Libune are discredited for their shoddy attack pieces on John McCain, they will still do ANYTHING to help their Messiah.


I'm voting for McCain. At least he doesn't plater on his makeup like a trollup.


Actually, this piece is unfair to Obama.

It is wrong to put McCain's Keating 5 scandal in the same breath as Obama's connections with Chicago's political establishment. McCain was actually investigated by the DOJ and the Senate. The Senate ethics committee determined that he used "questionable conduct." Unfortunately, I'm not exactly sure what that means.

From what I understand, McCain's was directly involved in the Lincoln Savings and Loan, It's collapse cost the taxpayers about $3.4 billion dollars from what I've read.

I have not seen an indictments for Obama, nor have I heard of any direct activity on his part that has cost the taxpayers a substantial amount of money.

While there is no doubt that Obama has been connected with corrupt individuals, his connections do not rise to the levels of McCain's connections.

Therefore, until Obama is investigated at a high level for corruption, ethics, etc., and until his connections cost the taxpayers a substantial amount of money, it is just not appropriate to mention his connections with Rezko in the same sentence when discussion John McCain's background.

This has nothing to do with whether a paper is liberal, conservative, or whether a paper treats one candidate as a messiah (until today, McCain could do no wrong) or another as a pariah (4 weeks straight of articles on words taken out of context from Obama's minister, not even Obama). This is about objective reporting.


This is a non issue. Obama is connected to Racism and Rezko. This is another attempt by the liberal media to push Obama into the White House. McCain will be the next President of the United States. God Bless John McCain.

Say no to BO. Use deodorant.


'From what I understand, McCain's was directly involved in the Lincoln Savings and Loan." Then your understanding is pathetically wrong. McCain was not involved in the collapse of the S&L at all. Obama, however, was directly involved in taking 20 years of Rezko money.


"JT", to most people, Frances Hill giving several thousand bucks to Dem candidates is evidence of her being a Dem Party activist. Get back into the real world, JT.

The question is, was reporter Zajac unaware that the "non-partisan" expert he quoted as dissing McCain was a partisan Democrat activist? Or was the reporter aware, but tried to hide that from the readers? Either way, it doesn't speak well of the reporter.

Intelligent readers assume that the reporter didn't come up with this non-expose expose himself, but rather was fed the info by the DNC or the Obama campaign. Which only underscores how much the Swamp has become a partisan political operation.


This article IS a joke and apparently will be the type of garbage the Tribune will be regularly dispensing this election as it does whatever it can to elect Obama. Anyone remember the hatchet job the Tribune did on Jack Ryan?
Anyway, only two people are quoted in this article. Yet, Andrew Zajac references "experts on tax law." Experts is plural and Zajac only quotes one. Zajac also says "and while the institute says it is non-political, critics say the agenda..." What critics? Who are these critics?
Two people are quoted in the article and Zajac uses "experts" and "critics."
What a load of nonsense this piece is!


Why am I not surprised by and scandal that surrounds this old man. He is a lap dog of Bush Co. He'll say anything an do anything to get elected president. I don't trust him or his so-called judgement. McCain's series of errors of fact and judgment are reflective of a pattern of lack of understanding and lack of strategic depth. McCain is more Bush. Not for me!

http://www.youtube.com/watch?v=zGXIuNthJ7Q&feature=user


See for yourself the work that The Reform Institute does in important areas like securing the homeland, ensuring energy reliability and independence and promoting economic opportunity. If these issues are important to you, consider making a at tax-deductible gift to the Institute.


Not only is Frances Hill NOT nonpartisan, she's employed as a consultant by the Campaign Legal Center (www.campaignlegalcenter.org), where her colleagues are well known, highly-litigious, Democratic activists. (The staff's bios can be found here: http://www.campaignlegalcenter.org/about_staff.html)

It should also be noted that the Campaign Legal Center does not disclose its donor list in its entirety either, choosing only to list "main donors." In addition, the CLC has been linked with McCain in the past (http://www.moresoftmoneyhardlaw.com/news.html?AID=792) and accused of some of the very same things that Ms. Hill is implying the Reform Institute is guilty of.

It seems that the adage about people in glass houses applies here.


McCain Senior advisor Carla Eudy was paid $177,885 for 30 hours per week annuallMcCain Senior advisor Carla Eudy was paid $177,885 for 30 hours per week annually from the tax exempt "Reform Institute"

www.webofdeception.,com


Below is the text of a letter to the editor sent by Reform Institute board member Charles Kolb.

I have been proud to be involved with the Reform Institute since its inception, and I am dismayed by the baseless allegations leveled against the Institute in the Tribune’s June 17 article. With 15 years of nonprofit management experience, I can attest to the fact that the Institute not only takes its legal obligations seriously, but also goes above and beyond what is required of tax-exempt educational organizations in publicly disclosing its donors.

The Reform Institute is a nonpartisan public policy organization seeking to build a more resilient America through fundamental reform in critical policy areas, such as homeland security, energy policy, immigration, economic policy, and governance and elections. These issues are among the top concerns for voters and are on the agendas for all campaigns. The Institute shapes its policy agenda without reference to any political campaign or political party.

What drew me to the Institute was its focus on bipartisanship and its approach to the issues. The Institute was proud to have the support of Senator John McCain as it played a key role in enacting landmark campaign finance reform legislation. Recently, the Institute has become a leading voice for resilience, hosting a national symposium in New York City and testifying on that subject before Congress.

The Institute’s IRS filings were reviewed and verified by expert tax lawyers and independent audits. The Institute noted the anonymous donations in its filings and was prepared to divulge the donor names to the IRS if requested.

The article also repeats discredited allegations involving donations to the Institute from Cablevision, claims that were examined and refuted by veteran cable industry reporter Ted Hearn of Multichannel News. The intimation of political favors is based on the flawed assumption that Senator McCain and Cablevision have corresponding positions on “a la carte” pricing of cable channels. In fact, Mr. Hearn points out that Senator McCain is a proponent of “a la carte” pricing, while Cablevision is strongly opposed. The Institute has no position on this issue.

The article is riddled with inaccuracies and does disservice to an organization doing substantive policy work.


Charles E.M. Kolb
Member, Reform Institute Board of Directors


Post a comment

(Anonymous comments will not be posted. Comments aren't posted immediately. They're screened for relevance to the topic, obscenity, spam and over-the-top personal attacks. We can't always get them up as soon as we'd like so please be patient. Thanks for visiting The Swamp.)

Please enter the letter "a" in the field below: