PoliZette

Will N.Y.’s New AG Let the Clintons Off the Hook?

Sixteen individuals who want to succeed disgraced Eric Schneiderman should say if they will prosecute the charity frauds

While most people focus on daily political dramas in Washington, D.C., and international capitals, momentous intrigue is playing out in New York as insiders scramble to select an interim replacement for the Empire State’s disgraced former attorney general (AG), Eric Schneiderman.

Aristotle observed that “nature abhors a vacuum.” This is especially true with vacant political positions in which an officeholder may exercise great power. After Schneiderman’s office suites are thoroughly sanitized, a burning question for many residing in and otherwise connected to New York State is: Who will succeed him as AG?

A long line of Democrats who talked big but accomplished little at reducing pay-for-play political corruption in both major parties, and evolution of seemingly unregulated globalism, have turned New York into a gigantic, global-scale version of Tammany Hall.

Will Schneiderman be succeeded by an even more conflicted partisan, or will New York install a modern version of Theodore Roosevelt, someone whose accomplishments in our state proved arguments for election and re-election to the U.S. presidency?

What’s at stake. New York remains a center in the financial universe, where the AG holds prosecutorial discretion — political allies can enjoy lenient treatment, while political enemies can be persecuted.

As many as 16 candidates now vie for AG. Public interviews are set to begin soon, so politicians and the media must ask tough questions, particularly to learn how each contender intends to ensure that New York’s laws are equitably enforced.

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Schneiderman’s successor will jump into a cauldron of controversies, including, from across the political spectrum, questions about why so few senior executives and directors of financial institutions bailed out starting in 2008 have since been investigated, removed, and punished.

Measured in comparison to the gross distress homeowners and retail borrowers suffered, finance titans seem to have escaped unscathed despite handiwork so aptly characterized by Gretchen Morgenson and Joshua Rosner in their book, “Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Created the Worst Financial Crisis of Our Time.”

If you think that’s bad … Then there are even more corrosive questions surrounding the manifold ways crooked donors and grasping politicians have used loosely regulated, supposed charities to manufacture valuable income tax deductions, to route tax-deductible sums in support of expensive campaigns, and even to fund boldly illegal personal enrichment.

Since Jan. 1, 1999, when Eliot Spitzer became attorney general, through Jan. 1, 2007, when Andrew Cuomo followed, until May 8, 2018, when Schneiderman slithered away, no New York prosecutor has seen fit to enforce applicable laws against the collection of “charities” ostensibly run or influenced by the Clintons from various declared and undeclared offices in their adopted state.

Will charity frauds finally be prosecuted? In New York state, I know of no clearer proof of unpunished charity frauds than publicly available records filed (and not filed) by a raft of tax-exempt entities spawned by the William J. Clinton Presidential Foundation, an “organization” incorporated Oct. 23, 1997, in Arkansas and registered to solicit inside New York in 1998.

Lawyers and those who care about proper enforcement of charity laws will enjoy this analysis of certain Clinton filings by Stuart Dean.

Some of the Clinton-connected charities whose leaders seem to believe or believed they have special dispensation to flout New York laws include: (1) the Bill, Hillary & Chelsea Clinton Foundation (and predecessor names); (2) American India Foundation; (3) International AIDS Trust; (4) Clinton Foundation HIV/AIDS Initiative, Inc.; (5) Bush-Clinton Katrina Fund; (6) Clinton Global Initiative Inc.; (7) Clinton Health Access Initiative Inc.; (8) Clinton-Bush Haiti Fund; (9) Alliance for a Healthier Generation Inc.; and (10) C40 Cities Climate Leadership Group Inc., to name just 10 examples that first come to mind.

My continuing review of public records concerning the above nominally tax-exempt organizations reveals that key disqualifying defects in records of directors, executives, and significant employees are omitted from initial New York state registrations and annual reports.

Administrative penalties in Mississippi for the main Clinton Foundation, administrative inquiries and actions in other states, and a consent agreement and order in Pennsylvania against a key Clinton Foundation fundraiser, then called O’Brien McConnell & Pearson Inc., do not appear to have been disclosed promptly or fully in all relevant New York state filings.

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Moreover, under the past three attorney generals in New York, supposed charities connected to the Clinton family seem to have routinely violated a raft of special New York state laws that mandate strict, independent audits of financial results, specific disclosures concerning government grants, and prompt notification, in detail, of material changes in the legal form, or tax-exempt status, of an entity operating or soliciting within New York.

The first question I would ask each AG candidate now is whether they see a long-standing pattern and practice of the Clintons’ practicing charity frauds since 1997. The second is what each seeker intends to do about enforcing laws most charities take seriously.

Charities aren’t supposed to be unregulated slush funds. Yes, temptation is high in New York for unscrupulous politicians (and some donors) to organize nonprofit corporations but, to ensure these are not actually booking all incoming contributions as revenues, to spend a portion of declared expenses on campaign overhead costs, and even to divert sums to subsidize the high cost of living large in New York.

These practices are strictly illegal under New York, federal, and other laws. And fake charities do cost New York state mammoth tax revenues at a time that revenues are needed more than ever. Allowing them to expand out of control has already sullied the reputation of New York’s entire, vital nonprofit sector.

Expunging charity frauds is one nonpartisan, unifying, common interest. In the words of former first lady Michelle Obama, “let’s move” to make examples of charity fraudsters still soliciting in New York State. After all, Bill, Hillary and Chelsea Clinton do not stand above all laws, immune from prosecution.

Or do they?

Charles Ortel, a retired investment banker, concentrates on exposing complex frauds in his new career as an investigator, writer and commentator. Since August 2017, he has been hosting the “Sunday with Charles” podcast and covering the Clinton Foundation case in depth, using publicly available source materials.​ To view his previous LifeZette contributions, go here.