ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, April 10, 1996 TAG: 9604100081
SECTION: NATIONAL/INTERNATIONAL PAGE: A-9 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
Between his two bids for the White House, Pat Buchanan ran a tax-exempt group that raised more than $2 million, promoted his brand of populist conservatism and provided well-paying jobs for his sister and closest political aides.
The group, called American Cause, compiled a contributors list for its own direct-mail fund-raising effort, then rented it to Buchanan's presidential campaign. The organization housed itself in the same building that served as Buchanan's 1992 campaign office, and shut down just days before Buchanan opened his 1996 campaign effort in the same building.
American Cause sponsored conferences that featured Buchanan as a speaker, giving him a forum to hone the messages that would become the centerpiece of his campaign - fighting a ``cultural war'' against liberalism, sealing America's borders and opposing trade agreements.
Among those paid by American Cause were Buchanan's sister and campaign chairman, Angela ``Bay'' Buchanan, who collected $101,500 over two years as its president, according to tax records. At the same time, she was paid thousands of dollars a month to wind down Buchanan's first presidential campaign, Federal Election Commission records show.
Terrence Jeffrey, Buchanan's campaign manager, received $103,000 in salary over two years to be American Cause's secretary-treasurer, the tax records show.
Buchanan was its unpaid chairman.
American Cause was granted tax-exempt status as an educational group, barring it from supporting political candidates.
The Internal Revenue Service recently issued a warning that tax-exempt groups formed or controlled by a prospective candidate could not spend money on things such as travel, studies, fund raising and ``any other expense which has the primary effect of promoting public recognition'' of the candidate.
Violators are subject to taxes and possible loss of their tax-exempt status.
A former top IRS enforcer who reviewed American Cause's materials for The Associated Press said the overlap between the Buchanan campaign and the tax-exempt group raised concerns about its tax-exempt status.
``Serious questions are raised as to whether [Buchanan] has availed himself of the issues and activities done by the group,'' said Milton Cerny, who headed the IRS tax-exempt rulings division for 30 years.
Scott Mackenzie, the Buchanan campaign treasurer who worked for American Cause, said the group was kept separate from presidential politics and used only to educate the public about issues such as health reform and trade.
Mackenzie said Buchanan's campaign rented American Cause's donor list for market rates and purchased its furniture and equipment after it shut down.
Other presidential candidates, including Bob Dole and Lamar Alexander, have previously come under criticism for forming nonprofit educational groups in off-election years.
American Cause recently filed a belated tax form for 1994 showing it raised $1.3 million and spent $913,000 that year. In 1993, it raised $866,000 and spent $939,000. The organization has not released a list of its donors.
American Cause traces it roots to a tax-exempt group called Citizens for the Republic, established in the late 1970s by future Attorney General Edwin Meese and Reagan White House aide Lyn Nofziger.
Buchanan took over the group after his unsuccessful presidential candidacy in 1992, renamed it and split it into two wings - one for tax-exempt education, the other for lobbying. Donations to the latter are not tax-deductible.
Mackenzie said the lobbying wing collected $2.1 million from a single contributor, billionaire South Carolina textile executive Roger Milliken. The money, he said, paid for advertising opposing the General Agreement on Tariffs and Trade.
Meanwhile, the educational wing sought ``to provide a forum for Middle America'' to ``debate and develop an American agenda,'' according to its brochures. It sponsored three conferences, including one in Boston in 1994 entitled ``The Roots of American Freedom.''
In a kickoff speech, Buchanan sounded themes that would echo in his campaign, including the need for term limits, tax reform and an ``America First'' foreign policy.
Critics contend that groups such as American Cause are little more than pre-campaign organizations that allow candidates to raise money tax-free and avoid federal campaign spending and disclosure laws.
LENGTH: Medium: 85 lines KEYWORDS: POLITICSby CNB