Citizens for Responsibility and Ethics in Washington today filed a whistleblower complaint with the IRS against campaign finance super lawyer James Bopp, the legal genius behind the Supreme Court's Citizens United decision, which opened the floodgates for corporate money in campaigns. CREW alleges that he's using a nonprofit organization he controls to divert money into his law firm without paying taxes on it.
Bopp's Terre Haute, Indiana-based law practice works with clients including the Republican National Committee, the National Organization for Marriage, and a variety of anti-abortion groups. He is also the general counsel to the James Madison Center for Free Speech, a nonprofit legal organization that shares an office with Bopp's law firm.The Madison Center has only one employee: Bopp himself, and all of the money it raises is used to pay Bopp's firm. (Much of the complaint seems spurred by this Slate story that detailed the unusual arrangement and which is included as an exhibit to CREW's complaint.)
CREW sees this arrangement as a clear violation of federal tax law, which bans nonprofits from providing a substantial benefit for private parties. The group finds it especially egregious and possibly criminal that Bopp has signed forms saying that the Madison Center doesn't employ any independent contractors who make more than $50,000, when it's paid his firm hundreds of thousands of dollars over the past few years. The fees paid to his firm are listed on the center's tax returns simply as legal fees, rather than fees to a contractor. CREW also alleges that the board of the Madison Center, which includes Amway heiress and deep-pocketed GOP donor Betsy DeVos, has violated its fiduciary duty by allowing this arrangement. It estimates in its complaint that Bopp is liable for more than $6 million in unpaid excise taxes and other penalties. (CREW has also made complaints against Bopp with the US Attorney in Indiana and the state attorney general.)
Bopp finds most of this preposterous. "I'm the only one that does any work, so I'm the only one that gets paid," he told me. "I'm not on the board. My firm is hired. The vast majority of things we do pro bono." He says he's not worried about the complaint, noting that despite CREW's long list of complaints filed against various people and organizations, "I can't find that they’ve ever won one. I've represented some of the people they’ve complained about and the IRS didn't do a damn thing."
When CREW convened a conference call with reporters today to discuss its complaint, Bopp phoned in to defend himself. "You didn’t ask me questions before you filed this ridiculous complaint," he exclaimed when CREW's executive director Melanie Sloan told him to convene a conference call of his own. "So I'm going to answer the questions." Reporters seemed happy to have him there to respond, but CREW cut him off after he started to dominate the discussion.
While liberals might like to see Bopp slapped down by the IRS, the CREW complaint seems like rather small potatoes, despite the high-profile target. The Madison Center's budget is relatively small, especially compared to what Bopp makes representing various political groups and the legal fees he recoups in court when he wins First Amendment cases. The center averages a little more than $200,000 in annual income, much of it coming from the Susan B. Anthony List, an anti-abortion group. If Bopp really were trying to use the nonprofit to avoid taxes, he's not funneling much of his money through it.
Sloan admits the potential infraction is fairly small, but argues that the size is insignificant. "I grant you it's not a ton of money, but anybody working in this sphere needs to follow the law," she says. "People don't just get to ignore the laws that are inconvenient for them. We have a lot of legal support for our claims. Sometimes I think when you're as significant a figure as Bopp is, you think the law doesn’t apply to you."