An article in the Capitol Hill newspaper The Hill made a poorly substantiated claim that "tax experts" believe that Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit government ethics watchdog group, may have violated IRS regulations governing nonprofit organizations by filing ethics complaints with the Justice Department and Federal Elections Commission against mostly Republican members of Congress. The claim against CREW was forwarded by Republicans, but the article downplayed the claim's partisan nature. In fact, no complaint has been filed with the IRS, and two of the three "experts" cited in the article demonstrated either incomplete or inaccurate knowledge of the issue.
In a March 14 article by staff writer Alexander Bolton, The Hill made a poorly substantiated claim that "tax experts" believe that Citizens for Responsibility and Ethics in Washington (CREW), a nonprofit government ethics watchdog group, may have violated Internal Revenue Service (IRS) regulations governing nonprofit organizations by filing ethics complaints with the Justice Department and Federal Elections Commission against mostly Republican members of Congress, including former House Majority Leader Tom DeLay (R-TX) and Senate Majority Leader Bill Frist (R-TN). In fact, Bolton's article quoted a total of three "experts" -- including one who demonstrated inaccurate knowledge of the issue and another who acknowledged not knowing enough about CREW's conduct to render a definitive opinion. Only one of the three, a professor at an Ohio law school,who said he thought there could be a "good case" against CREW, hedged those comments, saying "at least preliminarily." The Hill is a Washington-based newspaper that covers Congress.
The headline of the article -- "Watchdog's tax status, politics are questioned" -- gives no hint of the partisan nature of those asking the questions; the report appears based only on statements by National Republican Senatorial Committee (NRSC) spokesperson Brian Nick, who told The Hill that Republican lawmakers are "weighing ... options" for a such complaint.
CREW is classified by the IRS as a 501(c)(3) organization, meaning contributions to it are tax-deductible. Although the IRS released new procedures for the 2006 election cycle governing nonprofit organizations, to date, CREW has not been identified by the IRS as the subject of any scrutiny. Nonetheless, the Hill article suggested that, by filing ethics complaints with the Justice Department and Congressional ethics committees, CREW may have violated a prohibition on 501(c)(3) organizations engaging in activity that aims to influence the outcome of federal elections.
Bolton's article quoted three people to support the premise that CREW may have violated that prohibition, two of whom either acknowledged not knowing enough about the case to render a judgment about it or demonstrated that they did not know enough about the case by getting the basic facts of the case wrong.
Rosemary Fei, a lawyer at the San Francisco law firm Silk, Adler & Colvin, acknowledged in the article that the IRS would have to investigate "all the facts and the circumstances" before determining whether CREW violated the prohibition against influencing elections. And Miriam Galston, co-chairwoman of the American Bar Association's political and lobbying subcommittee on tax-exempt organizations and a professor at George Washington University Law School, told The Hill, "the fact that they [the ethics complaints filed by CREW] are all on one side could create the foundation for a claim like that [of the NRSC]." However, that assertion is refuted by Bolton's own reporting, which shows that CREW has filed ethics complaint against members of both parties, and listed Democrats and Republicans among the "13 Most Corrupt in Congress" in 2005.
The third "tax expert," Richard J. Wood, said in the article that the NRSC "is probably right" to believe that CREW may be violating IRS regulations, reportedly citing a memo written by the IRS general counsel saying that a group's "long-term strategy can be used to determine that it is engaging in prohibited behavior," although neither he nor Bolton indicated any knowledge of CREW's "long-term strategy" or suggested how it could be used to determine that CREW "is engaging in prohibited behavior." Wood is a former employee of the IRS Office of Chief Counsel who is currently a law professor at Capital University in Columbus, Ohio, which according to its website is the largest university affiliated with the Evangelical Lutheran Church of America.
CREW executive director Melanie Sloan is also quoted in the article pointing out that CREW's complaints are "solidly grounded," given that several of the lawmakers that the organization has targeted have either been indicted (as in the case of DeLay and Rep. Randy "Duke" Cunningham (R-CA)), are widely expected to be (as in the case of Rep. Bob Ney (R-OH)), or are still under investigation (as in the cast of Frist).
On the day The Hill published the article, Fox News anchor Brit Hume repeated the article's claims on Special Report with Brit Hume, using its thinly supported premise to state that "an advocacy group that claims to be a nonpartisan ethics watchdog here in Washington could soon be in serious trouble with IRS." He then repeated the charge that the majority of CREW's ethics complaints have been filed against Republicans, and quoted Sloan's defense of the organization, noting that she is "a regular guest on the left-wing network Air America."
From the March 14 edition of The Hill:
Tax experts say the activities of a controversial government watchdog group that has publicized four ethics complaints against Republican lawmakers since the beginning of this year raise red flags at a time when the IRS has renewed its focus on the political activities of tax-exempt groups.
In the past few weeks, Citizens for Responsibility and Ethics in Washington (CREW) has filed complaints with the Senate and House ethics panels against Sen. Rick Santorum (R-Pa.) and Rep. Sam Johnson (R-Texas). It has filed more ethics complaints against congressional lawmakers than any other prominent advocacy group in the past two years.
Republican Party officials say they are weighing a tax complaint against CREW for engaging in partisan activity.
Since its inception, CREW has prepared ethics complaints against or demanded probes by the ethics panels or the Justice Department of 12 sitting Republican lawmakers: Frist, Santorum, Sen. Ted Stevens (Alaska), Sen. Richard Shelby (Ala.), Sen. Saxby Chambliss (Ga.), Sen. John Thune (R-S.D.), Rep. Bob Ney (Ohio), Rep. Marilyn Musgrave (Colo.), Rep. Randy "Duke" Cunningham (Calif.), House Appropriations Committee Chairman Jerry Lewis (Calif.), House Majority Whip Roy Blunt (Mo.) and Johnson.
In addition, the group has filed Federal Election Commission (FEC) complaints against Frist, House Speaker Dennis Hastert (R-Ill.), the leadership PAC of then-House Majority Leader Tom DeLay (Texas), then-Senate candidates Mel Martinez and Alan Keys, both Republicans, and the Bush 2004 presidential campaign.
Republican Party officials say that CREW's activities violate regulations for tax-exempt organizations and that they are weighing filing a complaint with the IRS.
"It's certainly a possibility. We're weighing our options on that," said Brian Nick, spokesman for the National Republican Senatorial Committee.
Tax experts say that CREW's seemingly lopsided focus on Republicans will raise flags at the IRS, but they caution that determining violations of tax status so depends on the specific facts and circumstances of each case that it is impossible to predict how the IRS will act.
"At least preliminarily, I think they have a good case," said former IRS official Richard J. Wood, referring to the concerns of Republican officials. "It looks to me that they're probably right."
Wood is a professor at Capital University Law School, teaching about tax issues and business associations. He worked at the IRS from 1980 to 1990.
He cited the legal case pitting the New York City Bar against the IRS in which a court found that the bar violated its tax-exempt status by rating the qualifications of judicial candidates facing election. He also cited a memo from the IRS general counsel, GCM 39811, which states that even if a group does not intervene in the election of a candidate its long-term strategy can be used to determine that it is engaging in prohibited behavior.
Rosemary Fei, who represents tax-exempt and nonprofit groups as a lawyer with Silk, Adler & Colvin, said that the apparent one-sidedness of CREW's activities raises concerns but that it is impossible to know how the IRS would act without knowing all the facts and circumstances of the group's activities.
"If I were at the IRS, the imbalance in complaints would certainly cause me concern about whether the organization might have violated the political-intervention prohibition, but on the other hand that prohibition is based on an evaluation by the IRS of all the facts and the circumstances," she said. "While a single fact like this looks pretty bad, the IRS would need to investigate to see if the charity had legitimate public-policy or public-education or civic duties in mind when it brought these complaints."
But Sloan said she has criticized Democrats, including Reps. Neil Abercrombie (Hawaii) and Norm Dicks (Wash.), for ethically questionable conduct -- in quotes appearing in Capitol Hill publications, in The American Prospect magazine, and in the Los Angeles Times. She also noted that her group included two Democrats, Reps. William Jefferson (La.) and Maxine Waters (Calif.), on its list of the 13 most corrupt members of Congress, released last year. The list included 11 Republicans.
Sloan said that CREW's ethics complaints are solidly grounded. She noted that Cunningham recently pleaded guilty to accepting bribes, that DeLay was indicted in Texas in a campaign-finance investigation and that the Justice Department is widely expected to indict Ney in the near future. She also said that Frist, the target of a complaint CREW filed with the FEC, is struggling to resolve with the agency questions about his fundraising activity.
Miriam Galston, an associate professor at George Washington University Law School and the co-chairwoman of the American Bar Association's political and lobbying subcommittee on tax-exempt organizations, said that the IRS would likely look at how an organization handles its drafted complaints.
"Filing those complaints would not constitute, taken by themselves, intervening in a political campaign," Galston said. "If they went further and publicized the list and publicly tried to make some political mileage out of fact of the allegation and tried to sully campaign prospects using their own complaints, they could be said to be intervening in a political campaign."
Galston said that a group could be found to be engaging in improper political activity even if an election is not on the horizon.
"You could easily see that any kind of good-citizen or civic group would want to file complaints, but the fact that they are all on one side could create the foundation for a claim like that," she said.
CREW has publicized its complaints against Republican lawmakers on its website and through press releases.
Sloan said that she has filed complaints almost exclusively against Republicans because they control both branches of Congress and the White House and, as a result, are more likely to be the recipients of corrupting gifts and contributions.
"Republicans are the ones in power," she said. "You're stupid to pay off a Democrat. They can't do a whole lot for you."
Sloan also pointed out that CREW signed a letter from the Congressional Ethics Coalition, a group formed in 2004 to reform the congressional ethics process, that called for the House ethics panel to investigate six lawmakers, including three Democrats: Reps. Jim McDermott (Wash.), Conyers and Jefferson. She did not cite an instance when CREW on its own drafted an ethics complaint against or called for an ethics or Justice Department investigation of a Democratic lawmaker other than Lincoln.
From the March 14 edition of Fox News' Special Report with Brit Hume:
HUME: The Hill newspaper reports that an advocacy group that claims to be a nonpartisan ethics watchdog here in Washington could soon be in serious trouble with the IRS. Citizens for Responsibility and Ethics in Washington, or CREW's, status as a tax-exempt group bars political activity, but The Hill found since its creation more than three years ago CREW has filed at least 20 complaints against Republican lawmakers, only one against a Democrat. Melanie Sloan, who runs CREW, disputes any claims that the group is biased and claims the current number of complaints against Republicans on the current balance of power in Congress, saying, quote, "You are stupid to pay off a Democrat. They can't do a whole lot for you." She, by the way, is a regular guest on the left-wing network Air America.
Disclosure: CREW deputy director & communications director Naomi Seligman was previously communications director at Media Matters for America.