RI’s top right-wing
political group uses interesting financial practices to buy power
By Will Collette
In my last installment, I examined how RISC structured
itself to gain political power and, as a surprise side bonus, serve as a tax
shelter for some of its wealthy leaders.
I ended that installment with a general overview of how RISC
uses a non-profit foundation, the RISC Foundation, as a way to raise large
amount of cash from out of state donors while offering those donors the
benefits of tax deductibility.
I also reported that while RISC is Rhode Island’s leading
conservative lobbying and electoral organization, they report spending close to
zero dollars on lobbying and getting
its endorsed candidates elected.
In this installment, we’ll look in detail at how RISC spends its money.
Until recently, Charlestown held the dubious distinction of
being the headquarters for Rhode Island’s top ultra-conservative political
action group, the RI Statewide Coalition. Formed as the ”Shoreline Coalition,”
RISC was set up as the voice for the landed gentry along the south coast,
especially uber-rich seasonal property owners in Watch Hill and Shelter Harbor.
Their main issues were fighting the Narragansett Indian
tribe and crusading for the rights of rich land-owners. They were particularly
devoted to the idea of granting the right to vote to people based on property ownership, rather than on where they called home.
Several of those Shoreline Coalition founders went on to
form the Charlestown Citizens Alliance, where those values of animus toward theNarragansetts and a concern for rich, out-of-state property owners are core CCA
values.
The CCA's recently escalated attacks against the Narragansett Indian Tribe hark back to the CCA's RISC roots. Their attacks against the plan offered by Charlestown Democrats for a homestead tax credit for permanent residents is another. And CCA leaders like Town Council President Tom Gentz, Council VP Dan Slattery and CCA Steering Committee member Tom DePatie have all publicly voiced sympathy for non-resident property owners for not having the right to voice in local elections.
As I noted in my first installment, the apple doesn't fall far from the tree.
Where did the money go?
Anyone who reads the newspaper knows that RISC is a
conservative political action machine. Their money goes to pushing their
right-wing causes and candidates. The way they do that – and dance around the
lines set by IRS and the state – are a bit like watching a gymnast working the
uneven bars.
RISC and RISC-PAC are allowed to get involved in politics.
The rules vary slightly between them, but let’s just say that RISC and RISC-PAC
can lobby, push causes, endorse and support candidates and engage in lots of
other political action.
Of course, they are supposed to be “open and transparent” –
meaning that they report their lobbying expenses to the IRS and the Secretary
of State and their campaign expenditures to the Board of Elections. As I noted in
the first installment, RISC and RISC-PAC are not very forthcoming when it comes
to reporting what they spent to become the political players that they are.
But the RISC Foundation is strictly limited in what it can
do, and political activity is severely limited under the tax code. That is the
trade-off that allows them to offer their donors – including all those out of
state folks – tax-deductions on their donations.
Here is a sampling of expenditures reported by RISC-F and
RISC in its most recent report to the IRS:
- The Foundation pays 40% of
the rent for the space co-occupied by them and RISC.
- According to the
depreciation schedule in the Foundation’s most recent filing, the
Foundation owns all the office
furniture, file cabinets, computers and their LCD projector
- According to the RISC
filing for the same period, RISC itself doesn’t own any of its furniture
or computers
- The Foundation pays all of the cost of maintaining the
RISC website.
- RISC reports no website expenses
- On its IRS-990 report, the
Foundation says its website is at www.riscfoundation.com.
The problem is you won’t find a website at that address. Further,
according to Archive.org[1],
there apparently never was such a website.
- There is, of course, a
RISC website, maintained and updated frequently. It just went through a complete overhaul after Donna
Perry took over as Executive Director.
- RISC buys no office supplies
- The Foundation, on the
other hand, paid $7,563 for supplies.
- The Foundation paid
$25,703 for videos, $45,875 for public records, and $25,034 for a handbook
on legislators.
- RISC reported it spent
$47,062 to set up RISC’s business lobby network and another $27,444 on
educational activities.
- The Foundation’s filing
shows that it paid $5,086 for database maintenance, compared to only
$2,109 for RISC.
- The Foundation paid
$25,402 for “communications” while RISC only paid $6,335.
- On top of all that, the
Foundation made a direct transfer of $33,401 to RISC.
And that’s just what was in the last IRS-990 report.
The earlier reports show essentially the same story – the
Foundation raises most of the money in the form of tax-deductible donations
mostly from out-of-state, and pays most of the organizations’ expenses.
Among the high-lights of earlier “charitable and
educational” activities by the RISC Foundation, we find:
- In the RISC Foundation’s first year of operation, 2006, it actually spent nine times more than it took in to campaign against the Narragansett Indian Tribe. This deficit appears to have been covered by a loan from RISC to the Foundation, the last time that RISC funded the Foundation, rather than the other way around.
- In 2007, the RISC Foundation spent $24,415 to conduct a survey of voters on “the most important issues facing Rhode Island.”
- Also that same year, the Foundation spent $50,226 to intervene in the state’s and Charlestown’s lawsuit against the US Department of Interior and the Narragansett Indian Tribe in the infamous Supreme Court Carcieri v. Norton[2] case.
IRS
regulations on the conduct of non-profit, tax-exempt organizations like the
RISC Foundation contain some very clear prohibitions – no direct endorsements
or political intervention on behalf of particular candidates, parties or ballot
questions. There are also some pretty clearly permitted activities, such as
unbiased, non-partisan, purely educational material that addresses public
issues.
Then there is a huge gray area where IRS notes that it
reserves its right to examine the compliance of the non-profit on a case by
case basis. At best, RISC’s use of its Foundation to collect large
tax-deductible donations from its board members and others, and then to use the
Foundation to cover so many of RISC’s costs, seems like a pretty dark shade of
gray.
Add to that the absence of expenditure reporting for
lobbying and for the support of its candidates, and there are lots of questions
about the extent to which RISC plays by the rules.
The Future of RISC
 |
| RISC-F's new front man - will he do to the rest of us what he did to Central Falls? |
RISC is in the process of re-branding itself. They’ve moved
out of Charlestown to West Warwick. They’ve moved Harry Staley and his daughter Harriet Lloyd out of day-to-day control – for years, RISC was the Staley family business.
They’ve hired P.R. flack Donna Perry as director. Perry is a regular on radio,
mostly on her shock-jock
brother John DePetro’s program on WPRO[3].
Perry says RISC has decided to re-organize the RISC
Foundation which will now be chaired by retired Judge Robert Flanders – who
just recently finished fleecing
the city of Central Falls as their bankruptcy czar. Flanders and all-around
happy guy Gary Sasse will turn the RISC Foundation into a bona fide research
organization.
Whether that new role is in place of, or in addition to, the RISC Foundation’s role as a tax shelter for wealthy supporters of RISC's political mission remains to be seen.
RISC just had its annual
meeting on August 4 where Flanders, Sasse, Staley and others continued to
blame public worker unions for everything from global warming to NBC’s Olympics
coverage and excessive screaming on HBO's "True Blood." And, believe it or not, Donna
Perry tells us that all this is part of “the expanding reform movement in
Rhode Island.”
Reform what? Reform it how? And most importantly, reform it
for whose benefit, I wonder?
[1]
Archive.org is one of those great on-line research tools that allows you to
search for web content that has been changed or removed but has still left a
trace in internet archives. Generally, you have to take active steps to scrub
your website to keep its old content from showing up on Archive.org. Either
there never was a RISC Foundation website. Or if there was a RISC-F website,
then it was thoroughly “scrubbed” when it was taken down. The Charlestown
Citizens Alliance has been removing huge blocks of information from its website
– intentionally or not, hardly any of these changes show up on Archive.org.
[2] The case
became Carcieri v. Salazar after Barack Obama was elected President and
appointed Ken Salazar as Interior Secretary.
[3] Perry
might find herself getting less air-time. On Saturday, news leaked out that
brother John is in trouble – again – for mistreatment of women. In 2006,
DePetro was fired from his Boston radio talk show for calling one of the
candidates for Massachusetts Governor “a fat lesbian.” This time, the problem
for DePetro comes in the form of a sexual
harassment lawsuit by WPRO Content Producer Dee DeQuattro. DeQuattro claims
DePetro, in the guise of taking her to lunch, took her to a house he had
apparently acquired for sexual liaisons and attempted to coerce into having sex
with him. Read
the charges here.