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Natl. Committee for Responsive Philanthropy

JANUARY 5, 2006
4:51 PM

CONTACT:  Natl. Committee for Responsive Philanthropy
Naomi Tacuyan / Jeff Krehely
202-387-9177 x. 17 / x. 26

Abramoff Indictment Ignores His Misuse of the Capital Athletic Foundation
IRS should have led investigation of illicit dealings of CAF all along, philanthropic watchdog charges

WASHINGTON - January 5 - NCRP Executive Director Rick Cohen declared Jack Abramoff’s plea agreement announced yesterday as revealing the debilitated condition of government oversight of nonprofits and foundations. The indictments and resulting plea agreement acknowledge the dubious if not illegal grantmaking of Abramoff’s Capitol Athletic Foundation (CAF) in more than one instance, but fail to penalize Abramoff on his abuse of the CAF as a personal cash reserve.

“Abramoff may have copped a plea that acknowledges his personal tax evasion, but the biggest element of his tax evasion, the clearly phony Capital Athletic Foundation, has escaped scot free,” Cohen said. “The Department of Justice caught some of Abramoff’s bribery and corruption concerning the Sun Cruz deal and various campaign finance and lobbying violations, but the Internal Revenue Service should have been leading the investigation of Abramoff’s years-long history of hiding illicit dealings behind the CAF.”

For the past two years, alone among national philanthropic nonprofits, NCRP has detailed and denounced a variety of Abramoff’s misuses of philanthropy and called for IRS investigations, to no avail. Other than an investigation initiated by the Senate Finance Committee, Abramoff’s CAF remains an icon of blatant philanthropic abuse that has escaped the IRS’s attention or concern, and has been ignored by the even weaker self-regulatory capacities of foundation and nonprofit trade associations, such as the Independent Sector and Council on Foundations.

According to NCRP, the CAF used only a pittance of its nearly $4 million in philanthropic grants and expenses for legitimate charities, essentially buying its philanthropic bona fides with tiny $500 grants to the likes of the Boy Scouts in Irving, TX, the Jewish Community Center in Rockville, MD, and the Washington Tennis Education Foundation in Washington, D.C., to camouflage dubious grants to Abramoff-controlled charities such as the Eshkol Academy ($1.87 million in 2002 alone), grants to dubious charities for even more questionable activities such as the purchase of sniper equipment and sniper training for a school in Israel, and clearly inappropriate expenditures such as international golfing trips for members of Congress such as Ohio’s Bob Ney. Ney’s committee jurisdiction happened to include oversight of Capitol Hill contracts of interest to Abramoff’s lobbying clients, who also happened to be persuaded to contribute to the CAF by Abramoff and his associates.

Recently, the press has reported that some of the charities listed in the foundation’s grant lists such as the Waldorf School in Atlanta and PTACH in New York claim to have no records of having received the tens or hundreds of thousands of dollars that CAF reported to have given. “This is a clarion indictment of the IRS’s inadequate oversight of foundations,” Cohen said. “The fact that a foundation reports on its Form 990 or 990PF that it has made a grant seems to be all that the IRS is concerned about, the actual fact of the grant having been made and the cash or check having been received apparently of no consequence to the IRS monitors.” Cohen added, “If these charities actually did receive 5-figure and 6-figure grants from Abramoff’s foundation but suddenly cannot find the records to substantiate that, then the IRS ought to be taking a hard look at them too.”

On November 2nd, at a hearing of the Senate Indian Affairs Committee, Abramoff’s philanthropic tax advisor gave lengthy explanations to Senators McCain and Dorgan about the legality of some of the most odorous of CAF grants for sniper equipment and more, prompting an exasperated Senator Dorgan to conclude that “there wasn’t much that wasn’t permitted in these transactions…(that) it looks like the sky was the limit,” and Senator McCain to charge that the CAF grants “didn’t pass the smell test.”

“We share the frustration of Senators Dorgan and McCain,” added Cohen, “that foundations like Abramoff’s CAF could do so many clearly unwarranted and illicit activities that should have raised red flags at the IRS, but received no oversight or legal action.” Cohen added, “This underscores not only the need for stronger government oversight and enforcement, but stronger laws outlining what foundations should not be allowed to do under the guise of philanthropic grantmaking. Because Abramoff and his tax advisors may have found loopholes to make the CAF’s grantmaking nominally legal, that doesn’t make the grantmaking ethical or right.”

NCRP calls on the IRS to investigate the Capital Athletic Foundation’s grantmaking, and to pursue civil and criminal actions against not only Abramoff, but also against the attorneys and tax advisors who conspired with Abramoff to find ways of using foundations to make grants and expenditures that violate the public’s expectations of philanthropic institutions. “These tax exempt moneys, once they were entrusted to the CAF, were public funds to be used for public benefit purposes, not Abramoff’s private stash to be used for self-enrichment and political advancement,” Cohen charged, “and the American taxpayer shouldn’t have to lose out on millions of dollars of tax exempt funds due to the misspending of the likes of Abramoff, and inadequate oversight and enforcement offered by the federal government and by the leadership of the nonprofit and foundation sector.”


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