Daily Archives: September 17, 2013

IRS list reveals concerns over Tea Party ‘propaganda’

September 17, 2013
Gregory Korte, USA TODAY 8:56 p.m. EDT

WASHINGTON — Newly uncovered IRS documents show the agency flagged political groups based on the content of their literature, raising concerns specifically about “anti-Obama rhetoric,” inflammatory language and “emotional” statements made by non-profits seeking tax-exempt status.

The internal 2011 documents, obtained by USA TODAY, list 162 groups by name, with comments by Internal Revenue Service lawyers in Washington raising issues about their political, lobbying and advocacy activities. In 21 cases, those activities were characterized as “propaganda.”

The list provides the most specific public accounting to date of which groups were targeted for extra scrutiny and why. The IRS has not publicly identified the groups, repeatedly citing a provision of the tax code prohibiting it from releasing tax return information.

DOCUMENT: The IRS list of ‘political advocacy cases’

More than 80% of the organizations on the 2011 “political advocacy case” list were conservative, but the effort to police political activity also ensnared at least 11 liberal groups as of November 2011, including Progressives United, Progress Texas and Delawareans for Social and Economic Justice.

The IRS controversy first exploded in May, when Exempt Organizations Director Lois Lerner admitted that the IRS had targeted Tea Party groups for additional scrutiny beginning in early 2010. The IRS placed a hold on those applications for more than 20 months, an inspector general’s investigation found.

STORY: IRS approved liberal groups while Tea Party in limbo

On Nov. 16, 2011, IRS lawyers in Washington sent a list of cases to front-line agents in Cincinnati, along with comments and guidance on how to handle political organizations.

Tax law experts say those comments appear to show IRS employees trying to apply the murky rules governing political activities by social welfare groups.

But the American Center for Law and Justice, a nonprofit legal institute that represents 23 of the groups appearing on the IRS list, said it appears to be “the most powerful evidence yet of a coordinated effort” by the IRS to target Tea Party groups.

“The political motivations of this are so patently obvious, but then to have a document that spells it out like this is very damaging to the IRS,” said Jay Sekulow, chief counsel for the ACLJ. “I hope the FBI has seen these documents.”

The IRS categorized the groups as engaging in several advocacy-related activities that could have barred them from tax-exempt status, such as lobbying and “propaganda.”

But the word “propaganda” doesn’t appear in section 501(c)(4), which governs the social welfare status that most Tea Party groups were applying for, said John Colombo, a law professor at the University of Illinois. Instead, it appears in section 501(c)(3), which governs public charities.

“There would be no reason I would think to flag them if it’s for a 501(c)(4) status,” Colombo said. “That’s very odd to me.”

STORY: 1959 IRS rule is at the center of Tea Party scandal

In three cases, IRS lawyers noted that groups appeared to be connected to Republican politicians: Stand Up for Our Nation Inc., linked to former Alaska governor Sarah Palin; Reform Jersey Now Inc., linked to Gov. Chris Christie; and American Solutions for Winning the Future, founded by former House speaker Newt Gingrich. Gingrich’s group was approved last year.

Five groups were flagged as having “anti-Obama” materials in their applications or on their websites.

For instance, the IRS said the website of the Patriots of Charleston contains “negative Obama commentary.” Though the IRS didn’t cite examples, a November 2011 article on the group’s site says: “Obama’s and the Democrats’ track record of disaster is based upon a combination of their ignorance and their fundamental desire to convert America into a ruling class of wealthy all-powerful elitists and a single class of serfs.”

“The web site, as we explained to them on multiple occasions, is really a blog” that members can submit commentary to, said Joanne Jones, the group’s vice chairwoman. “I’m not going to tell you we weren’t political. We were to an extent, but we were within the limits of the law. For example, there’s one clear-cut issue: We did not endorse candidates.”

“To focus in on somebody saying something anti-Obama,” she said, “it’s almost like the speech police there. It’s disturbing. It’s the kind of overreach that leads into Obamacare.”

The group received its tax exemption in September 2012.

RHETORIC OF SOME GROUPS QUESTIONED

It wasn’t just anti-Obama rhetoric the IRS was looking out for. Progress Texas was identified by the IRS as engaging in lobbying, propaganda and political activities. IRS lawyers in Washington noted “anti-Rick Perry” rhetoric, referring to the Republican Texas governor, then a presidential candidate.

Progress Texas received a tax exemption as a social welfare group in June, 2012.

Campaign-finance watchdogs say the IRS scrutiny came out of a justified effort to police “dark money” in politics. After the U.S. Supreme Court ruled in 2010 that corporations and unions — and even non-profit groups — could engage in independent political advertising, social welfare groups became a vehicle for funneling undisclosed cash into the election system.

That’s the position of Progressives United, a group founded by former senator Russ Feingold, D-Wis., that itself appeared on the 2011 IRS target list.

“The fact that our group received some scrutiny does not change at all our opinion that scrutiny like this from the IRS, it’s their job. The law applies to us as it would any conservative group,” said Progressives United’s Josh Orton. “I feel like there’s this group of campaign finance nihilists who want to expand this into an argument that there should be no scrutiny at all. They want a wild west of election law, because they want to continue using secret corporate money to influence elections.”

Crossroads GPS, a group affiliated with GOP strategist Karl Rove, spent $70 million on the 2012 election. Its 2010 application for a tax exemption, obtained by the non-profit news organization Pro Publica last year, said it would spend 50% of its resources on “public education.” In the 2011 list, the IRS noted “significant anti-Obama rhetoric.” Crossroads has not received a tax exemption.

‘WE ARE TOTALLY ABOVE BOARD’

The Tea Party of North Idaho filed its tax-exempt application in February, 2010 — the same month IRS screeners in Cincinnati first brought Tea Party applications to the attention of officials in Washington, according to IRS employee testimony before a congressional committee.

A lawyer in the IRS Exempt Organizations Technical Unit in Washington wrote the Idaho group had “No significant amount of clear campaign intervention; however little issue advocacy or educational; significant inflammatory language, highly emotional language, little to no educational information on issues.”

The IRS lawyers recommended that screeners in Cincinnati look for other materials — including “press releases, commentary, articles, and research reports,” according to the IRS list.

That’s when Leslie Damiano, who co-founded the North Idaho group, started getting what she considered to be intrusive questions from the IRS. She said the tax agency wanted to know who her donors were, and what companies they own. They wanted to know the educational background of the group’s board members. And they wanted to know whether candidates were invited to the group’s meetings, and whether it made endorsements.

“We’re a conservative organization. We invited some independents,” she said. “We never had any rallies that were off the charts by any stretch of the imagination.”

Frustrated with the process, the Tea Party of North Idaho withdrew its application in 2012.

“We had an accountant, we had a bookkeeper. We were totally above board with everything we did,” Damiano said.

REDUCING THE NATIONAL DEBT

Some groups caught in the IRS’ net had no connection to national politics on either side. The Citizens for the Preservation of Rural Murrysville says it’s “dedicated to the preservation of the open and natural, rural character of Murrysville, Pa.,” although the IRS said it endorsed some local candidates. The Sarasota Bay Tiger Club is one of several similar Florida clubs that provide “a non-partisan forum on current political issues.” The club says it has “never endorsed political candidates nor advocated a particular ideology,” but the IRS said in its spreadsheet that it was “unclear” if that was the case.

The list also includes the Association to Reduce the National Debt, which was seeking to be recognized as a charity so it could solicit tax-deductible contributions — and give those contributions to the U.S. Treasury to put toward the national debt.

Founder Seth Eisenberg said the group was not political — and he told the IRS that.

IRS tax specialists noted “no political campaign activities.” But two years after applying, the association still hasn’t gotten his ruling letter. And without that letter, contributions are not tax-deductible and no one will give, he said.

All for a group that said it wanted to give the government money.

“I thought this would be a fast-tracked application. A no-brainer. But it got caught up in this whole political controversy,” Eisenberg said. “It’s the greatest irony that ever was.”

Follow @gregorykorte on Twitter.

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Billionaire Swindlers Line Up for ObamaCare Cash

July 17, 2013
By Michael Volpe 

An information technology (IT) company in line to bid on billions in new contracts as a result of ObamaCare is the subject of a growing list of scandals and investigations in which its alleged that, among a number of abuses, the company has produced low ball bids in order to win Medicaid related contracts, only to create overages that balloon the expense of the project as it is implemented.

The name of the company is Client Network Services, Inc (CNSI) and it’s headquartered in Maryland. The company will be able to bid on billions in new ObamaCare-related IT contracts because, in order for states to receive new grants for expanded Medicaid rolls, ObamaCare requires states to have IT systems that are able to share data at so-called finger-tip access. Because most states have antiquated systems, such overhauls will often require the assistance of companies like CNSI.

In March, Louisiana Governor Bobby Jindal canceled one such contract between CNSI and his state after it came to light that a federal grand jury was investigating the relationship between one of his top aides and CNSI.

Front Page Magazine interviewed Tom Aswell, a blogger and author from Louisiana with more than three decades of news experience. Aswell has been writing about the case from the beginning.

Aswell said he first became aware something was amiss in June 2011, when Bruce Greenstein went before the Louisiana Senate Governmental Affairs Committee to be confirmed as the secretary of Louisiana’s Department of Health and Hospitals (DHH), the equivalent of the US Health and Human Services (HHS) secretary.

During the proceedings, things became contentious and confusing when Greenstein refused to divulge the recipient of a contract to upgrade the State of Louisiana’s antiquated computer system, which electronically processed Medicaid health care claims.

Greenstein went back and forth with lawmakers for quite a while before he finally admitted it was CNSI, his own former employer. He assured the state legislators at that hearing that he created a firewall between himself and his former employer during the contractual process.

That turned out not to be true, and, instead, in March 2013, news was leaked that a federal grand jury was investigating the potentially illegal relationship between Greenstein and CNSI during the process in which this contract was awarded.

Once that came to light, not only did Jindal cancel the contract, but Greenstein resigned shortly after. Aswell said that all sorts of issues were raised with CNSI’s bid ($194 million), and a number of people in the media raised concerns that CNSI would not be able to achieve the contract for the pre-arranged price.

In 2012, Southeast Michigan Healthcare Information Exchange (SEMHIE), a multi-stakeholder initiative trying to integrate a health information exchange throughout southeast Michigan, sued CNSI for breach of contract after CNSI allegedly failed to provide SEMHIE with prior agreed upon software. An email was left unreturned by SEMHIE for this story. Jennifer Bahrami, press secretary for CNSI, also didn’t respond to an email for comment for this story.

In 2011, CNSI was accused of lowballing a contract in South Dakota, only to have expenses increase exponentially as the project wore on. A local story on the affair explained:

The South Dakota Department of Social Services has paid $49.7 million so far for a new Medicaid processing system that at this point remains inoperable.

The original contract was for $62.7 million, but the new system is now expected to cost far in excess of $80 million to complete and will take two to three more years to get running, according to court documents filed as part of a lawsuit between the contractor and the department.

The most in-depth investigation of CNSI occurred in Maine in 2006, and it was conducted by the magazine CIO, a journal for IT professionals. In that piece, CIO concluded that not only did CNSI’s system end up costing 20% more than the company’s originally bid, but its implementation was a logistical nightmare.

The department’s Bureau of Medical Services, which runs the Medicaid program, was being deluged with hundreds of calls from doctors, dentists, hospitals, health clinics and nursing homes, angry because their claims were not being paid. The new system had placed most of the rejected claims in a ‘suspended’ file for forms that contained errors.

Tens of thousands of claims representing millions of dollars were being left in limbo.

About 15 IT staffers and about 4 dozen employees from CNSI, the contractor hired to develop the system—were working 12-hour days, writing software fixes and performing adjustments so fast that Hitchings knew that key project management guidelines were beginning to fall by the wayside. And nothing seemed to help.

Because CNSI is a private company, their financials aren’t published, and thus, the exact amount of business it does with our government isn’t known. Furthermore, because most IT-related Medicaid contracts are done on the state level, tracking the amount of IT business that ObamaCare will create is also very difficult to do. It is clear that one company that should be happy with the implementation of ObamaCare is CNSI because it is without a doubt a boon to a company like it. The company’s behavior before and during the implementation of ObamaCare should therefore be watched very carefully and Front Page Magazine intends to do so.

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Obama waives ban on arming terrorists to allow aid to Syrian opposition

SEPTEMBER 16, 2013
By JOEL GEHRKE

President Obama waived a provision of federal law designed to prevent the supply of arms to terrorist groups to clear the way for the U.S. to provide military assistance to “vetted” opposition groups fighting Syrian dictator Bashar Assad.

Some elements of the Syrian opposition are associated with radical Islamic terrorist groups, including al Qaeda, which was responsible for the Sept. 11 attacks in New York, Washington, D.C., and Shanksville, Pa., in 2001. Assad’s regime is backed by Iran and Hezbollah.

The president, citing his authority under the Arms Export Control Act, announced today that he would “waive the prohibitions in sections 40 and 40A of the AECA related to such a transaction.”

Those two sections prohibit sending weaponry to countries described in section 40(d): “The prohibitions contained in this section apply with respect to a country if the Secretary of State determines that the government of that country has repeatedly provided support for acts of international terrorism,” Congress stated in the Arms Control Export Act.

“For purposes of this subsection, such acts shall include all activities that the Secretary determines willfully aid or abet the international proliferation of nuclear explosive devices to individuals or groups or willfully aid or abet an individual or groups in acquiring unsafeguarded special nuclear material,” the law continues.

The law allows the president to waive those prohibitions if he “determines that the transaction is essential to the national security interests of the United States.”

Under section 40(g) of the AECA, the Obama team must also provide Congress — at least 15 days before turning over the weapons — “the name of any country involved in the proposed transaction, the identity of any recipient of the items to be provided pursuant to the proposed transaction, and the anticipated use of those items,” along with a list of the weaponry to be provided, when they will be delivered, and why the transfer is key to American security interests.

Sen. Bob Corker, R-Tenn., and Sen. Carl Levin, D-Mich., endorsed providing military assistance to the Syrian opposition during an appearance on CBS’ “Face the Nation” Sunday.

“Our intelligence agencies, I think, have a very good handle on who to support and who not to support,” Corker said. “And there’s going to be mistakes. We understand some people are going to get arms that should not be getting arms. But we still should be doing everything we can to support the free Syrian opposition.”

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