Politicians Find Bipartisanship in Using Charities for Personal Gain

Pedro Espada Jr., the majority leader of the New York State Senate, is the subject of a civil lawsuit that alleges misappropriation of more than $14-million in charitable funds from the Comprehensive Community Development Corporation.

Andrew Cuomo, New York State’s attorney general, says Mr. Espada used the Bronx nonprofit organization as his “personal piggy bank,” diverting payments for unjustified salaries for family members and inflated expense claims, including roughly $20,000 in meals delivered to his home from a favorite sushi restaurant.

Mr. Espada has said the charges are retaliation by Mr. Cuomo for political losses, but if the allegations are proved true, they represent an egregious abuse of the public trust. However, they would be far from the only instance of a politician skirting ethical and legal standards by creating a nonprofit enterprise for his own benefit.

In recent years, there has been a growing trend among political figures creating sham nonprofit groups or taking advantage of existing nonprofit organizations, to advance their political ambitions, to line their own pockets, or both.

In a politically polarized environment, the abuse of nonprofit status is a rare instance of bipartisanship. Political leaders in both parties have used charities to abuse the public trust.

It is, unfortunately, not rare. In recent months, several members of Congress from both parties have been entangled in ethical questions relating to their lodging in a special boardinghouse known as the C Street House, for the Washington street in the Capitol Hill neighborhood where it is located.

The house is run ostensibly as a religious facility and therefore operates as a tax-exempt nonprofit entity. The rent charged to the distinguished residents is reportedly far below typical rent in the neighborhood, which raises a question of whether the difference between the fee charged and the market rate represents an inappropriate gratuity.

Citizens for Responsibility and Ethics in Washington, a watchdog group, last month filed complaints with the Senate and House ethics committees to register their concerns about possible violations of gift rules.

Among the notable residents of the C Street House over the past few years: Rep. Bart Stupak, a Democrat, and Republican Senators John Ensign, Tom Coburn, and Sam Brownback.

What has made the case of the C Street House so fascinating are the soap-opera tales that have come to light. It was within this sacred temple that disgraced Sen. Ensign and colleagues hatched their plan to pay off his former mistress and her husband, both of whom had worked for the senator in his legislative office and political operations.

Likewise, Mark Sanford, the Republican governor of South Carolina, turned to brethren in the hallowed chambers of the C Street House to advise him on his spiritual path, which apparently did not keep him from wandering onto the Appalachian Trail (his purported destination when he was actually in Buenos Aires with his Argentine girlfriend and “soul mate”).

It’s hard to tell whether the politicians—most of whom have denied wrongdoing or not commented on the C Street charges—got confused and somehow thought nonprofit status had something to do with philandering, not philanthropy.

More often, however, lawmakers turn to more pedestrian abuses of nonprofit status.

Rep. Steve Buyer, Republican of Indiana, established the Frontier Foundation in 2003 ostensibly to provide scholarships to Indiana college students, supported by hundreds of thousands of dollars in donations, mostly from lobbyists and corporations in the pharmaceutical industry and other corporations that had business before the House Energy and Commerce Committee, on which he sits.

According to Citizens for Responsibility and Ethics in Washington, which filed complaints with the Internal Revenue Service and also the House Office of Congressional Ethics, the Frontier Foundation failed to pay out any scholarships but did spend lavishly on fund-raising activities, including golf outings for Representative Buyer and foundation donors.

In the immediate wake of news reports and ethics complaints about the Frontier Foundation, Representative Buyer in January announced that he would not seek another term this fall.

In making his announcement, he cited health concerns for his wife, though he continues to serve in Congress.

The towering figure in the pantheon of political abuse of nonprofit status would have to be the Washington lobbyist and Republican power broker Jack Abramoff, who in 2006 was sent to prison for nearly six years for establishing a vast network of kickbacks and political payoffs to leading members of Congress and the executive branch.

At the heart of Mr. Abramoff’s network of corruption, which entangled dozens of politicians, lobbyists, and clients, were nonprofit organizations that he used to launder millions of dollars in illegal bribes and contributions.

Among the most colorful details in his sordid pit of corruption, Mr. Abramoff and his associate Michael Scanlon, who was also convicted of wrongdoing, established the American International Center, a front organization designed to appear to operate as a think tank. In reality, the center, which was run by childhood chums of Mr. Scanlon’s—one a yoga instructor and the other a lifeguard on the Delaware shore—was used to funnel millions of dollars in illicit payments to political associates.

Mr. Abramoff’s brazen exploits may be forgotten by many, given the short attention span of official Washington. But he is likely to come back into view, with the release this month of Casino Jack and the United States of Money, a high-profile documentary film.

From time to time, political figures will assemble a star chamber to grill nonprofit leaders to account for some supposed pattern of widespread abuse, usually based on a few examples of isolated excess.

The most recent grumbling comes from Sen. Charles Grassley, who happens to be the senior Republican on the Senate Finance Committee.

In recent weeks, Senator Grassley, joined by Senator Coburn, has chided the national Boys & Girls Clubs of America for paying its chief executive more than $900,000.

All of that makes me wonder: What if nonprofit leaders could assemble a special committee of their own to explore the rampant abuse of nonprofit institutions by political leadership? The blue-ribbon commission could be organized by a national nonprofit organization, perhaps one that is led by a former lawmaker, who might be sensitive to the realities of political life.

The committee might explore the relationship between the decline in public trust of nonprofit institutions and the growing incidence of abuse of nonprofits by politicians.

Perhaps there is a correlation between the declining confidence people have in nonprofit institutions, as politicians increasingly use nonprofit organizations to enhance their personal and political fortunes.

Such an investigation is unlikely ever to happen. But maybe Senator Grassley can draw upon what he learned as a key player in the health-care debate in Congress to establish a Hypocritical Oath for lawmakers who are involved with nonprofit organizations. Put simply, it might read, Politician, heal thyself.