Did The Leadership Institute Teach Ali Akbar “How To Beat The IRS”?

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Morton C. Blackwell

Morton C. Blackwell

In February 2011, Ali Akbar was an instructor at Morton C. Blackwell’s conservative Leadership Institute. Akbar presented attendees with information about online fundraising (PDF) while he was still on probation for fraudulent use of a debit card. Akbar’s association with the Leadership Institute links him indirectly to James O’Keefe and Congressman Steve Stockman. It also seems to be where he formed some important friendships. This connection speaks volumes about the conservative movement, sketchy right wing nonprofit organizations, and the organized campaign to attack the Internal Revenue Service by manufacturing a controversy over the agency’s legitimate reviews of nonprofit status applications.

The Leadership Institute is a vital part of the grassroots conservative movement, boasting tens of thousands of graduates who have become organizers, political operatives, and communicators. Because the Leadership Institute is not an official Republican Party organization, it has also been a main driver of the movement’s success at shifting the GOP to the right through outside pressure.

According to Blackwell, allied “movement conservatives” took the first steps toward outmaneuvering their party’s moribund minority leadership in the ’70s. More than a test of character, conservatism’s formerly abject status provided the key to those gains. With a wealth of political talent but few resources or constituencies, conservatives had no choice but to look beyond the two- and four-year cycles that dictate traditional political strategy. Instead of fighting an intra-party struggle they were certain to lose, they built an infrastructure outside the Republican Party dedicated to promoting talent, not winning the next election.

The Leadership Institute is a perfect example of that strategy, according to Peter Murray, a progressive management trainer who studied the institute’s model before launching his own nonprofit political training organization, the Center for Progressive Leadership, last year. “Being a 501(c)(3) not only means they can get tax deductions for their donors and build endowments, but they’re forced to look long term,” Murray says. “They’re not allowed to endorse candidates and get sucked into electoral politics. Year in and year out, all they do is build leaders.”

Conservatives can learn many things from the Leadership Institute. For instance, Jeff Gannon learned how to be a fake White House reporter at The Leadership Institute Broadcast School of Journalism, which seems little more than a training ground for partisan advocacy in the media. But as you might expect, fundraising is a major training training topic. For example, a two day course on “high dollar fundraising” (PDF) costs $150. And look at what what we find on the agenda:

beattheirs

We do not know how long the Leadership Institute has been teaching conservative activists like Ali Akbar and Steve Stockman how to “beat the IRS” while soliciting money from “high dollar donors,” but we suppose this has been going on for many years. And as we have learned in recent days, Charles and David Koch sit atop a $400 million political funding network of “high dollar donors” — exactly the sort of people that Leadership Institute trains conservative activists to solicit for contributions while “beating the IRS.”

Akbar and Stockman’s nonprofit organizations have similar track records of unregistered, unregulated, and non-tax deductible fundraising. When the Houston Chronicle could not find Stockman’s “Presidential Trust” in any public nonprofit databases, and the IRS could not confirm the organization’s nonprofit status for their reporters, it matched our own fruitless search for Akbar’s National Bloggers Club. We used exactly the same channels, and received exactly the same results. Akbar’s unaccountable leadership of right wing nonprofit organizations dates back to at least 2009, and many of his close associates and major endorsers in those endeavors have also been Leadership Institute alumni. Aaron Marks, who co-founded Akbar’s National Bloggers Club and was Akbar’s partner at the Vice & Victory agency, is a faculty member at the Leadership Institute. Bill Murphy, another Akbar partner at the National Bloggers Club as well as Vice & Victory, worked as a Field Representative for the Leadership Institute. Senator Ted Cruz, who attended Akbar’s Blog Bash at CPAC last year, was a volunteer faculty member at the Leadership Institute, which claimed credit for training key staffers on his campaign. Senator Rand Paul, who endorsed Blog Bash, credits the Leadership Institute for training his staff.

Also in 2013, Akbar created the Groundswell email list wherein grassroots conservative activists convened with Breitbart.com “journalists” to formulate talking points on the IRS “scandal” for their conference calls with House Republicans. Along with Benghazi-gate, the resulting fake IRS controversy consumed all the Oxygen in Washington this past Summer, annihilating all efforts at effective lawmaking while blowing a smokescreen to obscure some very real fraud. Stockman, whose campaign fundraising has come under as much scrutiny as his mysterious nonprofit, was one of the most enthusiastic proponents of this contrived scandal in which Tea Party groups complained of imaginary harassment by the Obama administration. Ultimately, the entire affair derived from the fact that the IRS is not supposed to let nakedly-partisan political activities enjoy tax-free nonprofit status. At the core of their missions, organizations that want a 501(c)(3) designation must provide social benefits to a free society in order to receive it. We are still waiting for someone to explain to us how James O’Keefe’s Veritas Visuals can possibly qualify for a legal tax-free status, and the fact that it does is a comment on just how willing the IRS has been to stretch the clear wording of the law until it is completely out of shape.

Not that this was good enough for the conservative movement, of course, because they have far too much to lose if the IRS ever actually did take a long, hard look at their activities. Remember, these are supposed to be “outside” groups. That “outsider” facade is actually the very thing that gives these organizations credibility with grassroots activists for whom the Republican Party is not conservative enough. But because these groups do have incredible power within the party itself, they are constantly identified with nakedly-political agendas, especially in our era of shutdowns and sequesters. For example, nine years ago Raw Story caught the Republican Party listing several “non-partisan,” tax-exempt nonprofits — including the Leadership Institute — as “GOP groups,” which would be a clear violation of the law.

A nonprofit “may not attempt to influence legislation as a substantial part of its activities and it may not participate at all in campaign activity for or against political candidates,” the IRS law reads.

At least six “GOP groups” listed and linked on the Republican National Committee website are tax-exempt nonprofits. These include the American Enterprise Institute, American Values, Coalition for Urban Renewal, Frontiers of Freedom, the Heritage Foundation and the Leadership Institute.

The GOP’s website was quickly scrubbed, but the incident pointed to just how closely and carefully the conservative movement has built its “outside” organizational infrastructure specifically for the purpose of affecting the party’s legislative priorities. This starts with Leadership Institute-trained campaign staff and volunteers who serve on political campaigns, and it ends with Leadership Institute alumni either in office or lobbying the office-holders. Strictly speaking, these activities are not supposed to be a “substantial” part of any nonprofit’s activities, whether or not they instruct people in “how to beat the IRS.”

Unsurprisingly, the Leadership Institute was one of the loudest organizations during the contrived IRS scandal. Morton Blackwell made a great deal of noise about a recent IRS audit of his organization, incorporating it into the grand mythology of an Obama-directed campaign against the conservative movement.

According to LI’s website, the organization received a notice on June 1, 2011 of an audit of its tax return and activities in 2008; 2008 is the year President Obama was elected to office. For more than a year, the IRS requested 23,430 pages of records which included a list of 2008 interns and their future employers, sample emails between employers and LI regarding ConservativeJobs.com and how LI’s more than 300 trainings are advertised.

“The IRS’ indefensible behavior is worse than we first thought, as it targeted both new and existing conservative groups in politically motivated attacks,” Blackwell said in a statement. “Fortunately my Leadership Institute had the resources to stand up to the government’s bullying and intimidation. Other groups, including grassroots and tea party groups we’ve helped train, did not.  Defending ourselves from the harassing audit cost my organization more than $50,000 in legal fees alone.”

Blackwell said nothing about teaching thousands of volunteers “how to beat the IRS” while soliciting Koch money. He never addressed questions about the partisan nature of his organization’s activities. And he had nothing to say about Leadership Institute veterans who collect donations as if they were legitimate nonprofits, but who never actually apply for nonprofit status. These would be great questions for reputable journalists to start asking him, because the IRS no longer seems inclined to risk the ginned-up outrage of political organizers who pretend to be apolitical social welfare enthusiasts.

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About Author

Army veteran. Rabbit caretaker. Metalhead. Student of right wing culture wars since 1987. Andrew Breitbart's lunatic cultists annoyed me, so I blogged here as Xenophon for over a year before unmasking to become Editor. Follow me on Twitter or at my World War I blog.

  • http://pupsoc.com Bill Schmalfeldt

    Ya just gotta wonder how much longer it will be until the IRS brings the hammer down on these criminals.

    • http://www.fordham.edu/halsall/ancient/xenophon-anabasis.asp Xenophon

      We wonder if they ever will. As far as we can discern there is no political upside to enforcing the laws here. Of course, the law says that nonprofits cannot engage in politics, but the IRS interprets that to mean that political engagement cannot be the primary purpose of the organization. We would support measures to get the IRS to enforce the law as written, but without a change of regime in the House of Representatives, that is unlikely to happen.

  • http://pupsoc.com Bill Schmalfeldt

    How surprising. WJJ Hoge III pooh-poohs this column and says “beating the IRS” is not “a bad thing.”

    • http://www.fordham.edu/halsall/ancient/xenophon-anabasis.asp Xenophon

      Funny how Mr. Hoge says that breaking tax laws is no big deal, but if anyone leaves a nasty comment in his blog then it is time for criminal charges. What a warped little world that sad man inhabits.

  • Hofenbrau

    Another great article. Love it!! Keep them coming…

    • http://www.fordham.edu/halsall/ancient/xenophon-anabasis.asp Xenophon

      We have fresh things to report tomorrow, so please do make time to visit.

  • RogerS

    I don’t know much about the Leadership Institute but I do know about the IRS because one of the partners in the firm here used to be in the Criminal Enforcement Division there. Right before the holidays, I gave him some of the articles that have been written about Mr. Akbar using a fake non-profit to raise money and then not filing a 990 form with the IRS. He came into my office an hour ago and told me that Mr. Akbar could go to prison for his conduct. He was so “concerned” about the matter that he put together a white paper for the IRS and sent it to a former colleague of his who still works at the Service. He stated unequivocally that the IRS will open a criminal investigation into Mr. Akbar and his business enterprises. I suspect that there will be other legal implications for Mr. Akbar because people who donated to the fake non-profit can sue him, and could even form a possible class action in a federal court.

    This is a very serious matter that could implicate the Leadership Institute if the investigation ties others to Mr. Akbar’s frauds. If my client came to me and told me they were involved with Mr. Akbar, I would insist that they repudiate him, demand a refund of all monies given to him, and cease all contact with him.

    • http://pupsoc.com Bill Schmalfeldt

      When I reported Akbar’s phony 501(c)3 to the IRS in the summer of 2012, I was told point blank that they were aware of him and an investigation was underway. Since then, Akbar has joked on several occasions about smoking cigars with IRS agents and having a laugh at my foolishness.

      The hubris. My lord, the hubris.

      • http://www.fordham.edu/halsall/ancient/xenophon-anabasis.asp Xenophon

        Frankly, we are not holding our breath while waiting for the IRS to drop the hammer. Akbar certainly deserves the agency’s attention, but we see no political upside to them pressing charges.