Self-Proclaimed Ethics Group Shows it is Ethically-Challenged… Again

Several weeks ago, we noticed Citizens for Responsibilities and Ethics in Washington’s possible skirting of IRS code by seemingly issuing a de facto endorsement of a slate of candidates through “CREW’s Crooked Candidates 2010” list (see our statement here) even though non-profits under Section 501(c)(3) of the Internal Revenue Code are prohibited from doing so.

Now CREW Executive Director Melanie Sloan is advancing a defense of sorts of Representative Eddie Bernice Johnson, the former Chair of the Congressional Black Caucus, who awarded at least 23 Congressional Black Caucus Foundation (CBCF) scholarships to members of her family or the family of a staff member, in violation of CBCF rules.

Sloan tells The Hill, “While awarding scholarship to relatives is inexcusable in any event, the more serious question is whether Rep. Johnson knew she was violating the rules when she made the awards.”

Well, not exactly. Even if Johnson wasn’t aware of the CBCF’s rules, she sure should have been aware of the IRS prohibition on personal inurement for those serving on the boards of 501(c)(3) organizations such as the CBCF. Johnson served on the governing board of the CBCF until at least the end of 2005, according to the group’s annual reports. The Hill notes that some of Johnson’s inappropriate awards were made in 2005, which would coincide with Johnson’s service with the CBCF. A refresher from the IRS:

No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization.

Johnson may have violated tax law, something even more serious than violating the CBCF’s rules for awarding the scholarships. Not only should Johnson be subjected to an ethics committee inquiry, but the CBCF should be audited by the IRS to determine how widespread the problem is within the organization and to determine whether continued recognition as a tax-exempt charity is justified.

Puzzling that CREW, a group that would brand a candidate for Congress “corrupt” for as small an offense as being a former aide to Karl Rove, would make excuses for a sitting Member of Congress who appears to have violated tax law.

Maybe it is not so surprising when you consider the Member’s party affiliation.

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