Groups Charge ALEC With Tax Fraud Over Secretive "Scholarship" Fund That Finances Junkets for State Lawmakers
As Legislators Converge on Chicago, Watchdogs Urge Full Disclosure of Travel Slush Fund Spending and Tough Enforcement of State Gift Laws
The American Legislative Exchange Council (ALEC) is running a secretive, multi-million dollar slush fund that finances lavish trips for state legislators and has misled the Internal Revenue Service about the fund’s activity, two government watchdog groups charged today.
* Filing a Common Cause complaint with the IRS Whistleblower Office and submitting a joint letter to the IRS Commissioner charging ALEC with filing fraudulent tax returns that massively underreported and grossly misrepresented its “scholarship scheme,” and of operating the fund in violation ALEC’s 501(c)(3) tax exempt status.
“ALEC pledged this spring to be more transparent. This is a chance for the organization to keep that promise,” said Arn Pearson, Common Cause’s vice president for policy and litigation. “Our elected officials really should not accept expense-paid trips and lodging from special interests, but if they choose to do so, the voters are entitled to know who is paying, and how much.”
“We now know which corporations funded trips to posh resorts for hundreds of lawmakers to vote behind closed doors with lobbyists on proposals to change state laws,” said Lisa Graves, executive director of CMD and alecexposed.org. “It’s disgraceful for ALEC to use its tax-exempt status to act as a conduit for gifts to facilitate influence peddling that advances the lobbying agenda of special interests to the detriment of ordinary Americans. This is corruption."
The ALEC confabs bring together corporate executives, lobbyists, and state lawmakers for closed-door meetings where they vote side by side on pro-corporate legislation to take back to their states. ALEC’s agenda includes the privatization of schools and other public assets, anti-labor laws, weakened protections for clean water and air, and telecom deregulation bills. ALEC’s legacy includes a national drive on behalf of “Stand Your Ground” laws like the Florida statute at issue in the Trayvon Martin shooting, and restrictive Voter ID measures that make it harder for students, elderly, minority and disabled voters to cast their ballots.
The top 10 corporate donors to the ALEC scholarship fund for the years data is available are:
The CMD-Common Cause report said ALEC promotes its meetings “in vacation-like terms.” One of its invites promised legislators “endless sandy beaches, sunny days, beautiful sunsets and the cool gulf breezes.” The event was at a luxury hotel, near a golf course where ALEC funder R.J. Reynolds Tobacco sponsored a clinic and tournament for lawmakers and lobbyists, the report said, one of many such events.
Others – Marcus Owens, the former head of the IRS’ nonprofit tax section, and Bob Sloan of the
Voter Legislative Transparency Project – have also urged the IRS to investigate misrepresentations they allege ALEC has made in its federal tax filings regarding its lobbying and its payments for travel by elected officials.
The top 10 states receiving ALEC “scholarships” for legislators for the years data is available were:
- About Us
- Money In Politics
- DISCLOSE Act
- Corporate Accountability
- Citizens United Decision
- About the Koch Brothers
- Other Campaign Finance Reforms
- Only People Are People
- McCutcheon v. FEC
- Government Accountability
- Elections and Voting
- Ethics in Government
- Office of Congressional Ethics
- Media and Democracy
- Young Activist Program
- Research Center
- Press Center