Details on Citizen Action’s Involvement in a Money-Laundering Scandal:
In 1997, a thriving CA suddenly imploded following the public disclosure of its involvement in a money laundering scandal that involved the illegal juggling of funds between the AFL-CIO, the leaders and officials of individual unions (including the Service Employees International Union, the Teamsters Union, and AFSCME), the Democratic Party, then-Clintonadministration chief fundraiser Terry McAuliffe, and former Clinton White House Deputy Chief of Staff Harold Ickes.
One purpose of this juggling was to funnel illegal contributions to the re-election campaign of Ron Carey as president of the Teamsters Union. The conspirators donated at least $150,000 to the tax-exempt Citizen Action, which a few days later transferred $100,000 to Carey’s re-election effort.
According to the Internal Revenue Service:
(1) “The Teamsters donated $475,000 to Citizen Action, and in return, Citizen Action allegedly helped channel some of that money to the Carey campaign…. Citizen Action paid off a previously forgiven 1990 loan for $25,000 plus interest, and then the lender, Jeremy Sherman, sent $35,000 to the Carey campaign. This appears to be just one example of how the some of the $475,000 was allegedly laundered through Citizen Action.”
(2) “Citizen Action reportedly sent $75,000 to Michael Ansara’s Share Consulting for work that was never done. The $75,000 allegedly went instead to reimburse Ansara’s wife, Barbara Arnold, in part for her $95,000 contribution to the Carey campaign. This may also have been part of the $475,000 plan.”
(3) “Citizen Action reportedly paid $100,000 to Martin Davis’ November Group after receiving $150,000 from the AFL-CIO’s Richard Trumka, which he allegedly received from the Teamsters. This $100,000 reportedly went to help pay for a large direct mail effort that the November Group was executing for the Carey campaign.”
One of the conspirators identified by Congressional and U.S. Attorney investigations was Paul Booth, who was then the national training director of AFSCME, and who served as a conduit for $27,100 of the illicit money transfer.
“Before the Teamsters scandal, there were problems” at Citizen Action, said Edward Kelly, former director of CA’s Massachusetts chapter. “Basically, I saw national go from a nonpartisan, grass-roots organization to a partisan one tied to the Democratic Party. I didn’t like that.” “In the early 1990s,” Kelly added, “during the fight for national health care, it was a pretty viable organization, and what allowed it to get big was door-to-door canvassing. But over time, national leaders lost interest in canvassing. So, what some of us were beginning to see was a shift from an organization that was committed to building grass-roots power to one that wanted to be a big inside player in Washington, D.C. … Once they took that step, they became involved in all sorts of questionable activities.”