DATELINE: February 12, 2009, Chicago
Yesterday we heard a local Chicago radio personality claim that other states and cities don’t have anywhere near the level of political corruption as Illinois and Chicago. As Chicagoans who have watched how business is done in Chicago and Illinois during the last fifteen years, we understand his point. You may have seen Gov Blago on the View or Letterman, but you have no idea how deep the corruption runs around here. The Chicago Sun-Times is the paper of record when it comes to chronicling the investigations and arrests. The Sun-Times regularly does full-page spreads mapping the connections between the parties. Yet, Roe Conn, the afternoon drive-time talker, is wrong. There is plenty of corruption to go around. Detroit, Newark, Baltimore, New York, San Diego, Philadelphia, and other major Americans are not immune, as recent headlines have demonstrated. Our attention was drawn to Philadelphia with the trial of Vincent Fumo now in full bloom.
We’ve been following Fumo’s shenanigans for years. We even have a Google alert set for him. We seem to receive an alert every day. You know the former Pennsylvania State Senator is in trouble. Prosecutors have waited at least five years, but this week they got their opportunity to...
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cross-examine the man himself, who is fighting a 139-count federal indictment.
What initially attracted us to the Fumo story was his involvement with Citizens' Alliance for Better Neighborhoods, a nonprofit corporation that has served as a front for Fumo. Its street-level focus offered Fumo the opportunity to hand out the equivalent of walking around money in the form of menial jobs to potential voters. How did Fumo fund this charity? Simply, as a powerful state senator, he did backroom deals, conditioning legislation and regulation favorable to large corporations on contributions by those corporations to the charity. The most famous contribution came from Peco, the large electric utility company, in exchange for Fumo withdrawing his objections to Peco plans. Peco has acknowledged the transaction and indicated its regret. Craig McCoy of the Philadelphia Inquirer described Fumo’s testimony this week at the trial, writing:
In 1998 and 2000, Fumo withdrew his legal objections to Peco business plans after the utility agreed to freeze rates for a decade and to make the multi-million donation.
He said Corbin McNeill, then the chief executive of Peco, told him in a one-on-one meeting that Peco did the deal because, "We want you out of this." McNeill told Fumo that, "Quite frankly, you're a pain in the ass," Fumo quoted the executive as saying
Fumo said he was "terribly proud" of the negotiations. He said, though, that he tried to keep the charitable donation secret for fear that critics would use it to attack him. The Inquirer broke the news of those Peco donations in 2003, five years after Fumo first struck a deal with the utility.
Fumo Explains Laptops, Peco Donation (Feb. 10, 2009). Peco eventually gave the charity $17 million. We also have written about a massive e-mail document destruction effort orchestrated by Fumo. It offers many lessons for nonprofits developing record retention policies. As we recall, federal prosecutors leaned on two Fumo associates who actually destroyed the records to obtain evidence against Fumo. Fumo now claims he sought the advice of legal counsel.
Fumo is accused of misspending at least $1 million of that amount for his own benefit. He claims, according to one article reporting on the trial, to have borrowed the money. Maryclaire Dale, Fumo: No Walls Between Staff’s Senate, Other Work, Associated Press (Feb. 11, 2009). During his testimony, Fumo referred to Citizens' Alliance as “my nonprofit, my entity, my baby.” In describing the Peco money, Fumo testified, “I felt terrific” In describing the funds, he said “We knew it was unrestricted….The goals [presumably the charity’s] changed overnight.” He continued, “The more power I get, the more they get.” If you still don’t get what was going on, Fumo tied a bow around the package for you, when he said “I guess we looked at it as a constituent-service arm of the office.” Quotes sourced to Monica Yant Kinney, Fumo’s Fixation on ‘My Agenda,’ Phil. Inquirer (Feb. 11, 2009).
Earlier in the trail, three Citizens’ Alliance employees took the witness stand to provide testimony how they performed work for Fumo “at his Philadelphia mansion, at his two homes at the Jersey Shore, and at his farm outside Harrisburg.” Craig R. McCoy, Citizens’ Alliance Staff Tell of Fumo Jobs, Phil. Inquirer (Dec. 2, 2008).
Citizens’ had a separate executive director, but in describing Fumo's testimony, the Inquirer reported:
Fumo, who had once sought to distance himself from Citizens' Alliance, yesterday embraced the nonprofit.
Though he held no official position with the nonprofit and had said in interviews that he got no benefits from it, yesterday he made it clear that he called its shots....
He said flatly that he functioned as Citizens' Alliance's executive director and made the call on its numerous spending decisions. "In the end, the final say was mine," Fumo said at one point, referring to the group's heavy investments in real estate.
Ruth Arnao, a former Fumo legislative aide and close friend, held the actual title of executive director of the nonprofit for many years. She is now Fumo's codefendant.
Craig R. McCoy and Emilie Lounsberry, Fumo: I Took From Nonprofit, But It Was Lawful (Feb. 11, 2009). Fumo acknowledged that Citizens’ spent $250,000 on political polls. It also secretly financed a lawsuit against a top Republican senator, according to the Inquirer. Fumo summed the situation up, in arguing that this activity was legitimate, by explaining, “In the end, it all revolves around whether I could get more political power to carry out my agenda.”
Fumo acknowledged that he received $63,000 in tools and other items from Citizens’ Alliance. According to the Inquirer, Fumo claimed he was entitled to the tools and the other perks he received from Citizens’ because he never drew a salary, but obtained millions of dollars for Citizens’. That is accurate. He apparently sold his influence to obtain those contributions. That would mean that rather than direct payments from Peco, Fumo routed them through Citizens’. Citizens’ Alliance was not the only charity that Fumo pillaged. During his testimony, Fumo admitted that he took dozen of free cruised worth $115,000 on luxury motor yachts owned by the Independence Seaport Museum. That was OK, according to Fumo, because the museum’s president approved them. As you may recall from prior posts, the president is currently serving prison time for a massive embezzlement scheme perpetrated against the museum.
And so we will be following Fumo's continued testimony this week closely. We hope the IRS and the Pennsylvania charity regulators also are following the trial. Citizens' Alliance sounds like it is need of an audit. We can only wonder whether its remaining assets should be transferred to a charity with a less colorful past. In the end, the lesson still holds: When politicians are involved with charities, follow the money and note what the charity does rather than what it says it does.
As for Fumo, maybe the employees of Citizens' Alliance will be delivering Christmas decorations to a new address this coming December. Time will tell.
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