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Jesse came to do good and did well

"THIS BUD'S a Dud" was the Rev. Jesse L. Jackson's rallying cry during the 1980s against Anheuser-Busch, which he accused of racism for having few minority-owned distributorships. Today, all is apparently forgiven.

Two of Jackson's sons, Yusef and Jonathan, were granted a lucrative Anheuser-Busch distributorship in Chicago in 1998. This franchise gives the younger Jacksons exclusive rights to sell $30-$40 million worth of Budweiser and other products in an area that includes Wrigley Field. The brothers, who own 90 percent of the company, were 28 and 32 years old in 1998. Neither had any experience in the beer business. The remaining 10 percent is owned by a longtime Anheuser-Busch employee who apparently runs the company.

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When asked about the deal at his boisterous March 8 news conference, Jackson said the questions amounted to "racial profiling" of his sons. He maintained that the distributorship was a "private business" and he would have nothing to say about it. In response to recent media inquiries, the distributorship has refused to disclose how many African-Americans it employs.

Jesse Jackson's charmed existence is over. The legion of journalists who attended his news conference grumbled as they filed out. CNN and Fox, which televised the event live, cut out early as Jackson spent the 90 minutes attacking his critics and ducking questions about his finances. The frustration of the press corps was reflected in the skeptical tone of the media coverage the next day.

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By forfeiting his moral authority, Jackson now finds himself the subject of the same level of scrutiny faced by other public figures. He is not adjusting well. For sure, there is too little shame in our society. The hypocrisy of Jesse Jackson providing "spiritual counseling" to Bill Clinton while he carried on his own extramarital affair is too much, however, even by today's weak standards.

Questions about whether payments to the mother of his child were omitted from a tax form have exploded into a larger controversy over Jackson's personal and organizational finances. On Feb. 28, the National Legal and Policy Center, of which I am president, filed a formal complaint with the Internal Revenue Service against the Citizenship Education Fund, Jackson's largest nonprofit group. We argue that CEF is operating outside of its tax-exempt status.

CEF, whose board includes beer magnates Yusef and Jonathan, sponsors something called the Wall Street Project. Its ostensible goal is noble, to promote the economic empowerment of African-Americans through entrepreneurship. But CEF's critics say it merely shakes down corporate America and the beneficiaries are often Jackson's family and friends, many of whom are already wealthy.

The recent CBS-Viacom merger is a case in point. Viacom owns the UPN television network, an asset it will have to shed under federal regulations governing network ownership.

Jackson's solution is for Viacom to sell UPN to a minority businessman. He reportedly has already met with CBS Chairman Mel Karmazin with three qualified prospects in tow. The first was Percy Sutton of Inner City Broadcasting. According to Jackson's disclosure forms from his 1988 presidential run, his wife owned between $250,000 and $1 million worth of Inner City stock, an asset she reportedly still holds. The second was Chester Davenport, a longtime Jackson friend and CEF financial backer. The third was a Hispanic businessman whose relationship with Jackson is unclear.

It was a previous merger, detailed by the Chicago Sun-Times in February, that helped Chester Davenport become a very rich man. After first opposing the SBC Communications-Ameritech merger in 1998, Jackson supported it after Davenport's firm, Georgetown Partners, was cut in on the deal. To win approval of federal regulators, Ameritech sold half its wireless business to a GTE Corp.-led venture. Davenport reportedly put up $60 million for a 7 percent share in the new $3.3 billion company. He was even named chairman despite having no experience in the telecom business. According to a company spokesman, he would have "no operational responsibility." As a presumed sweetener, $500,000 was kicked in to CEF.

Because of the necessary approval of federal regulators friendly to Jackson during the Clinton administration, it is telecom and media mergers where Jackson has found the most fertile grounds for his tactics.

When GTE Corp. and Bell Atlantic Corp. merged to become Verizon Communications Corp., Jackson threatened to protest but eventually supported the merger. GTE kicked in $625,000 to CEF and Bell Atlantic provided $375,000. Left-wing activists opposed to the merger complained that Jackson had been "rented." Likewise, Jackson threatened to protest the merger of AT&T; Corp., the nation's number one long distance carrier, with cable giant TCI before they made gifts to his organizations. Jackson has defended these various deals by claiming there was no quid pro quo with any of the companies. Appearances undermine that claim, but even if they were all carried out with only a wink and nod, it does not solve Jackson's problem. The tax code strictly prohibits any private benefit resulting from the operation of a tax-exempt group.

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Jackson asserts that he never tells corporate America with whom to do business, but only submits a list of qualified prospects. Even the latter activity apparently violates CEF's tax exempt status.

We assert in our IRS complaint that CEF has operated more like a business than a public charity by providing valuable services for corporate America and wealthy minority entrepreneurs. This is the heart of our IRS complaint, a matter we believe of much greater magnitude than the possibility that CEF monies were used for improper payments to the mother of Jackson's child.

The fact that many of the minority entrepreneurs who have benefited from the Wall Street Project also happen to be Jackson's relatives and friends invites even greater scrutiny by the IRS.

The IRS has just come off a wave of audits of conservative and free-market organizations. The leaders of these organizations suspect the worst, namely that they have been pursued because of criticism of the Clinton administration. The IRS has fed these fears by stonewalling efforts by Mark Levin, an attorney with the Landmark Legal Foundation, to learn how the audits came about. Whatever red flags the IRS identified for audits of conservative organizations are easily exceeded by the appearances surrounding Jackson. Alan Dye, a Washington-based, nonprofit tax attorney, asserts that if CEF were a conservative organization, the chances of audit would be 100 percent.

Whether the IRS treats Jackson like any other taxpayer or CEF like any other nonprofit group will be an interesting test of whether Jackson can count on the same kind of protection that has served him so well over the years.

Whenever challenged, Jackson has cried racism, and he did so with even greater flourish at the news conference. According to the Washington Post, Jackson became "visibly angered at the mention of [the National Legal and Policy Center's] name." He went on to label us "an extreme, right-wing group who you should not even give credit for being a normal public interest group."

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I must confess that I was surprised that Jackson would respond so furiously. Prior to the disclosure of the extramarital affair, I am not sure he would have responded at all.

Something has changed. Our legal analysis of tax law is based on information that has been publicly reported in the past. It has all been out there.

Until now, an informal but enforced silence has existed about what has been obvious to millions of Americans for years -- namely that Jesse Jackson came to do good but instead did very well.

Peter Flaherty is president of the National Legal and Policy Center, which filed a complaint with the IRS on Feb. 28 against Jesse Jackson's Citizenship Education Fund. The complaint can be read at www.nlpc.org.


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