Jesse Jackson Group Hit With IRS Complaint

David Thibault | July 7, 2008 | 8:19pm EDT
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( - Jesse Jackson's Citizenship Education Fund may become the target of an Internal Revenue Service inquiry, following a complaint filed Wednesday by a public interest legal group.

The IRS complaint, filed by the National Legal and Policy Center, charged that Jackson's CEF, "has engaged in conduct which appears to violate the [federal] Code," governing not-for-profit organizations. According to the complaint, the alleged "misconduct falls into three areas: non-exempt purpose, private inurement, and procedural non-compliance."

The complaint to IRS Commissioner Charles Rossotti argued that such "red flags ... justify the [Internal Revenue] Service initiating an investigation and/or audit," of Jackson's group, which could result in revoking its tax-exempt status.

Keiana Peyton, Jackson's press secretary, said the organization did nothing wrong.

"Our books are clean and are open. We are not, by any means, surprised that different organizations are calling for some sort of review, but we invite that, because ... this is an opportunity to showcase all of the works we have done and how diligent we have been in keeping our records."

Jackson founded the Citizenship Education Fund in 1984. It is the largest of his non-profit organizations and "seeks to empower citizens through the effective use of public policy advocacy, issue orientation, and connections between the greater community and the disenfranchised," according to CEF's Internet site.

However, NLPC President Peter Flaherty accused CEF of failing to comply with the law in the filing of their annual tax returns. "You're supposed to put your five top independent contractors on your form 990, and in 1999, even though they have a million dollars going out in consulting fees, they don't list any consultants, which is quite curious," he said.

In its complaint, the NLPC also cited reports in which Jackson's group lobbied on behalf of successful corporate mergers that had faced opposition from some civil rights groups, only after those corporations had made contributions to Jackson. The complaint said this gave the impression that Jackson's organization was acting "more like a fee-for-service consulting business rather than a charitable/educational organization."

Recently, Jackson was at the center of another controversy when it was revealed he had had an extra-marital affair with an employee that produced an illegitimate daughter. Jackson admitted the affair and said he was supporting the little girl. But the NLPC alleged that Jackson used money from CEF for personal reasons, including to help Karin Stanford, the mother of his child.

"A woman with whom Jesse L. Jackson fathered a child during an extramarital affair had approval to use funds buy a house in Los Angeles," the complaint reads.

Flaherty alleged that Jackson also threatened an economic boycott against the Anheuser Busch Companies, Inc. to help his two sons, Yusef and Jonathan, gain business leverage.

"Two of Jesse Jackson's sons, both officials of [the Citizenship Education Fund], were given a lucrative Budweiser distributorship in Chicago, despite the fact that they had no experience in the beer industry." Flaherty said.

The Anheuser Busch incident is only one example of Jackson's efforts to "blackmail" U.S. corporations into agreeing to his demands, according to Flaherty. The merger between telephone giants GTE and Bell Atlantic was opposed by Jackson, until "the two companies between them, kicked in a million dollars to CEF," Flaherty said.

Peyton acknowledged that "there have been attacks by the media saying that, with Anheuser Busch in particular, Reverend [Jackson] had boycotted them and now, his sons have ownership."

But according to Peyton, Jackson's "two sons are extremely qualified, one being a lawyer, the other graduating from Northwestern with a masters degree in business.

"Anheuser Busch was looking for some new leadership and they wanted to extend and build on their market" by attracting more African-Americans, she said. "So, I think that before people make assumptions about Reverend having discussions with Anheuser Busch ... that this was him strong-arming them, I think, is not fair to say."

Jackson is said to be currently pressuring the media conglomerate CBS/Viacom into selling its UPN television network to the minority owned Inner City Broadcasting. "Jackson's wife has a significant amount of stock in Inner-City Broadcasting," according to Flaherty.

"Through this complaint and related activities, we hope to put the public spotlight on these companies and we hope that they'll be less likely to submit to this form of blackmail," Flaherty said.

Flaherty said the conduct of Jackson and his group is akin to a form of racial extortion. "I believe the companies are afraid of being accused of being racist," said Flaherty. "Whether it's appropriate or not, Jesse Jackson has been anointed by the media in this country as the primary spokesman for African-Americans."

"He says he wants to increase the economic power of black people. I think he wants to increase the economic power of some black people, especially if they're relatives," Flaherty said.

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