EXCLUSIVE: Career officials rebut claims of White House interference in security clearance process
Did Clinton Foundation mislead IRS? State filings raise the question
By John Solomon
When confronted by detractors, the Clinton Foundation often uses a common line of defense: The charity is one of the most scrutinized in history and no one has found anything wrong with it.
But state regulatory filings suggest that may not be true.
In December 2005, for example, the Utah Division of Consumer Protection flagged missing information in the Clinton Foundation's federal tax filing with the IRS, known as a form 990. The state regulator specifically flagged money spent on professional fundraisers and consultants that were excluded from the required section of the filing.
The state regulator urged the charity to file "an amended IRS form 990 reporting professional fundraising/consultant fees on line 30." In particular, officials questioned nearly a half-million dollars in consultant fees about which it wanted more detail.
The foundation's tax filing for the year in question, 2004, showed zero dollars spent on the required line for fundraising consulting expenses, even though other documents filed with the IRS identified more than $400,000.
The review was standard for a charity seeking a license to operate in Utah. The response regulators got back, however, was not so standard: Former President Clinton's charity declined to make the change, even though Utah was suggesting the foundation's federal tax form was incomplete or misleading.
"The problem that the Foundation faces is the enormous expenses and undertaking it would be to amend its 990," a law firm representing the Clinton Foundation wrote back.
"Given that obstacle, the Foundation has no choice but to withdraw its application to register to solicit the public in Utah."
In lay words, the cost of properly informing the IRS and complying with federal tax law was too much, so the foundation just ditched its Utah licensing request. There is no record of amended 2004 tax form by the charity, which means Utah's concerns about possible missing information for the IRS wasn't addressed at the federal level.
Foundation officials confirm the episode but said they believed they did not mislead the IRS because other parts of their submission included fundraising consulting expenses in a category called "Other Expenses." "Our 2004 Form 990 is complete by IRS standards as we fully disclose fundraising expenditures in Part II - Other Expenses," the foundation said in a statement emailed to me.
The Utah episode, though a decade old, and other state regulatory issues involving the Clinton Foundation are gaining new attraction because they are included in thousands of pages of documents gathered in a whistleblower submission filed last year by a firm composed of former federal law enforcement investigators, called MDA Analytics LLC.
That submission made with the IRS, and eventually provided to the Justice Department in Washington and to the FBI in Little Rock, Ark., alleges there is "probable cause" to believe the Clinton Foundation broke federal tax law and possibly owes millions of dollars in tax penalties. That submission and its supporting evidence will be one focus of a GOP-led congressional hearing Thursday in the House.
The foundation strongly denies any wrongdoing. But it acknowledges its own internal legal reviews in 2008 and 2011 cited employee concerns ranging from quid pro quo promises to donors, to improper commingling of personal and charity business.
Another of the issues the foundation's own lawyers flagged: a culture of noncompliance.
Some issues with compliance are clear in a review of more than 2,000 pages of state regulatory filings and actions involving the foundation that were included in the whistleblower submission.
For example, the foundation entered into a consent decree in 2002 in Mississippi in which it admitted it had raised money in the state without a proper license. The foundation says it was simply an oversight, paying a small fine in the hundreds of dollars.
But the charity potentially engaged in false statements for years later, inaccurately declaring in numerous states that it had never been subject to an adverse regulatory action - while failing to disclose the Mississippi violation.
The whistleblower submission to the IRS identified more than 100 state forms in which the foundation inaccurately answered. The foundation conceded the errors to me but suggested they were akin to minor traffic violations, pointing to a column by a tax expert two years ago that made such a case.
Likewise, in 2008, the Clinton Foundation's AIDs charitable arm had its license to collect donations in Massachusetts involuntarily revoked for failure to file the necessary paperwork.
Foundation officials blamed that action on paperwork failing to keep up with changes in the group, which altered its name and eventually spun off from the foundation. State regulators weren't told the old group's name had been allowed to expire.
The records also show the foundation received multiple deficiency notifications, and had its license expire once in the state of Georgia, usually because of late paperwork.
At Thursday's congressional hearing, such evidence likely will be cited by Republicans eager to raise the question of whether the Clinton Foundation got favorable treatment from the IRS and FBI and was allowed to skate despite warning signs or technical violations. With a current investigation of President Trump's family charity already public, expect the GOP to question whether there are two forms of justice: one for the Clintons, and another for the Trumps.
John Solomon is an award-winning investigative journalist whose work over the years has exposed U.S. and FBI intelligence failures before the Sept. 11 attacks, federal scientists' misuse of foster children and veterans in drug experiments, and numerous cases of political corruption. He is The Hill's executive vice president for video.