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<\/a>Feds received whistleblower evidence in 2017 alleging Clinton Foundation wrongdoing<\/p><\/div><\/p>\n
BY JOHN SOLOMON, OPINION CONTRIBUTOR
\nTHE HILL<\/p>\n
When a House subcommittee chairman bangs his gavel next week to convene an unprecedented investigative hearing<\/a> into the Clinton Foundation, two questions will linger as preeminent: Is the Clinton family charity really the international do-gooder that earned a perfect four-star rating<\/a> from Charity Navigator, or does it suffer from corruption and illegalities as conservatives allege? And if it is the latter, how much evidence of wrongdoing does the government possess?<\/p>\n The answer to the first question is that the foundation and its projects reported collecting about $2.5 billion to help global crises, from AIDS to earthquakes, even as its own auditors, lawyers and employees privately warned of problems<\/a> over the years.<\/p>\n The answer to the second question may reside in 6,000 pages of evidence attached to a whistleblower submission filed secretly more than a year ago with the IRS and FBI.<\/p>\n That evidence was assembled by a private firm called MDA Analytics LLC, run by accomplished ex-federal criminal investigators, who alleged the Clinton Foundation engaged in illegal activities<\/a> and may be liable for millions of dollars in delinquent taxes and penalties.<\/p>\n In addition to the IRS, the firm\u2019s partners have had contact with prosecutors in the main Justice Department in Washington and FBI agents in Little Rock, Ark. And last week, a federal prosecutor suddenly asked for documents from their private investigation.<\/p>\n The 48-page submission, dated Aug. 11, 2017, supports its claims with 95 exhibits, including internal legal reviews that the foundation conducted on itself in 2008 and 2011.<\/p>\n Those reviews flagged serious concerns about legal compliance, improper commingling of personal and charity business and \u201cquid pro quo\u201d promises made to donors while Hillary Clinton<\/a><\/span> was secretary of State.<\/p>\n The submission also cites an interview its investigators conducted with Andrew Kessel that quotes the foundation\u2019s longtime chief financial officer as saying he was unable to stop former President Clinton from \u201ccommingling\u201d personal business and charitable activities inside the foundation and that he \u201cknows where all the bodies are buried.\u201d<\/p>\n \u201cThere is probable cause that the Clinton Foundation has run afoul of IRS rules regarding tax-exempt charitable organizations and has acted inconsistently with its stated purpose,\u201d MDA Analytics alleged in its submission. \u201cThe Foundation should be investigated for all of the above-mentioned improprieties. The tax rules, codes, statutes and the rule of law should and must be applied in this case.\u201d<\/p>\n Current and former Clinton Foundation sources confirm that CFO Kessel met with MDA investigators in late 2016 and subsequently was interviewed by FBI agents in 2017. But they insist he did not implicate former President Clinton or the foundation in any illegality.<\/p>\n They also acknowledge that the internal reviews cited in the submission were authentic and did in fact flag issues that the foundation has tried to address, including major governance changes made public in 2013.<\/p>\n \u201cThe Clinton Foundation has been one of the most heavily scrutinized charitable organizations in the world, and subjected to outrageous, politically motivated allegations that have been proven false time and time again,\u201d the foundation said in a statement. \u201cCritics continue to resurrect these false claims to try to damage the reputation of the Clintons and the Clinton Foundation. The fact is, the Clinton Foundation has demonstrably improved the lives of millions of people across America and around the world, while earning top ratings from charity watchdog groups in the process.\u201d<\/p>\n MDA\u2019s partners<\/a> include experts whose work ranged from compliance by private Wall Street firms to Drug Enforcement Administration money-laundering investigations, terrorism-financing probes and U.S. attorney prosecutions. They specifically created the firm to investigate 501c3 charities. The firm wasn\u2019t hired by clients but, rather, conducted its research on the Clinton Foundation at its own expense with the hope that its whistleblower submission might result in a government reward if the IRS substantiated wrongdoing and recovered tax dollars.<\/p>\n The IRS sent multiple letters in 2017 and 2018 to MDA Analytics, confirming it had received the submission and it was \u201cstill open and under active investigation.\u201d But, shortly before last month\u2019s election, the agency sent a preliminary denial letter indicating it did not pursue the allegations for reasons that ranged from a lack of resources to possible expiration of the statute of limitations on some allegations.<\/p>\n I asked a half-dozen former federal investigators to review the submission and key evidence; all said the firm\u2019s analysis of tax-exempt compliance issues would not be that useful to federal agencies that have their own legal experts for that. But they stressed the evidence of potential criminality was strong and warranted opening an FBI or IRS probe.<\/p>\n \u201cIt is a very good roadmap for investigation,\u201d said retired FBI supervisory agent Jeffrey Danik, a prior practicing certified public accountant who helped the bureau make some of its most complex financial fraud and terrorism cases during a 29-year career.<\/p>\n \u201cWhen you have the organization\u2019s own lawyers using words like \u2018quid pro quo,\u2019 \u2018conflicts of interest\u2019 and \u2018whistleblower protections,\u2019 you have enough to get permission to start interviewing and asking questions,\u201d he said.<\/p>\n Danik said the only investigative challenge is that some documents assembled by the private investigators are marked as attorney-client privileged and federal agents might need special permission to use them.<\/p>\n \u201cGiven that [special counsel Robert] Mueller got the OK to investigate Michael Cohen and his attorney-client communications with President Trump<\/a><\/span>, I imagine that hurdle could be overcome under the crime-fraud exception,\u201d he said.<\/p>\n The whistleblower submission\u2019s public emergence comes at a sensitive time, as President Trump has taken to Twitter in recent months<\/a> to decry a lack of action by his Justice Department against the Clintons.<\/p>\n And a GOP-led congressional subcommittee, led by Rep. Mark Meadows<\/a><\/span>(N.C.), is planning to hold a hearing next week to review the work of John Huber<\/a>, the special U.S attorney named a year ago to investigate all things Clinton.<\/p>\n That hearing is designed to determine how much money and resources Huber has dedicated to the investigation and whether any action might be expected on issues that long have concerned conservatives, including Hillary Clinton\u2019s transmission of classified information<\/a> over an insecure private email server and the foundation\u2019s activities.<\/p>\n A prosecutor working for Huber called MDA Analytics last week, seeking copies of their evidence, according to sources. The firm told the prosecutor that the FBI has possessed the evidence in its Little Rock office since early 2018, the sources said.<\/p>\n Some evidence that MDA investigators cited is public source, such as internal foundation reviews hacked in 2016 and given to WikiLeaks<\/a>. Other materials were provided to the investigators by foreign governments that have done business with the charity, or by foundation insiders.<\/p>\n One of the nonpublic documents is an interview memo the MDA Analytics investigators penned after meeting with Kessel in late November 2016 at the Princeton Club in New York City.<\/p>\n Kessel told those investigators that \u201cone of the biggest problems was Mr. Clinton\u2019s commingling and use of business and donated funds and his personal expenses,\u201d according to the whistleblower submission.<\/p>\n \u201cThere is no controlling Bill Clinton<\/a><\/span>. He does whatever he wants and runs up incredible expenses with foundation funds,\u201d states a separate interview memo attached to the submission.<\/p>\n \u201cBill Clinton mixes and matches his personal business with that of the foundation. Many people within the foundation have tried to caution him about this but he does not listen, and there really is no talking to him,\u201d the memo added.<\/p>\n The memo also claims Kessel confirmed to the private investigators that private lawyers reviewed the foundation\u2019s practices \u2014 once in 2008 and the other in 2011 \u2014 and each found widespread problems with governance, accounting and conflicts of interest.<\/p>\n \u201cI have addressed it before and, let me tell you, I know where all the bodies are buried in this place,\u201d the memo alleges Kessel said.<\/p>\n Foundation officials confirm Kessel attended the meeting but declined to describe what was discussed, except to say Kessel \u201cstrongly denies that he said or suggested that the Clinton Foundation or President Clinton engaged in inappropriate or illegal activities.\u201d<\/p>\n “Mr. Kessel believed he was meeting an old professional acquaintance who was looking for business from the Foundation,” the foundation said in a statement.<\/p>\n MDA Analytics said it stands by the information it submitted to the IRS and can prove its accuracy.<\/p>\n The comments attributed to Kessel track closely to statements employees and executives of the foundation made during the 2008 and 2011 internal legal reviews.<\/p>\n For example, the 2008 review written by a private lawyer named Kumiki Gibson, who was hired by the foundation to study its governance, directly flagged concerns about improper commingling of charitable and private business.<\/p>\n \u201cThe work of the Foundation and the President are intertwined in a way that creates confusion at, and undermines the work of, the Foundation at virtually every level,\u201d Gibson wrote, warning that such commingling poses \u201creputational and legal challenges, and with confusion, inefficiencies and waste.”<\/p>\n Specifically, the memo warned the foundation had not created policies and procedures \u201crequired by law\u201d and that some of its leaders \u201cappear to have interests that do not always align with those of the Foundation.\u201d<\/p>\n It also raised the possibility of illegal activities, saying the foundation and its managers held an \u201canti-compliance attitude\u201d and that there were lower-level employees who \u201cbegged\u201d for whistleblower protections after witnessing \u201cless than fully compliant behavior or even worse are asked to participate in or condone it.\u201d<\/p>\n