John Edwards 2008: What’s not to like

Yet at the same time, Edwards was also working for an industry that symbolized the overprivileged: a hedge fund, a partnership that specializes in high-return investments for the richest and most exclusive of clients. The firm, Fortress Investment Group LLC, hired Edwards in October 2005, several months after the poverty center opened, to help develop investment opportunities worldwide and offer strategic advice on global economic issues, according to a statement issued by Fortress in October 2005.

Edwards said in an interview that as he explored career options he talked with numerous firms, including Goldman Sachs, and decided to work as a part-time consultant to learn more about capital markets and to make money. Fortress did not return repeated calls for comment.

Edwards also said his role at Fortress was as an adviser, not a decision-maker.

“It was just being a consultant on the phone,” he said. “They would call and ask what I saw happening in Washington, sort of macro view of what was happening in Washington with the economy. What I saw happening in the world. Those were the kinds of things we talked about.”

He earned nearly $480,000 as a consultant in 2006, and stopped his work there by the end of that year; he still has about $16 million of his reported net worth of $30 million invested in Fortress funds. Employees at the hedge fund have given more than $150,000 in campaign contributions to Edwards, making the partnership one of his largest sources of funds.

After he joined the presidential race, Edwards’s involvement with Fortress became a political liability. Fortress had invested a portion of its assets in subprime mortgage lenders who recently began foreclosing on homeowners around the country, including some Hurricane Katrina victims, the poor people Edwards’s poverty center was set up to help.
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When the Fortress investments were revealed in the Wall Street Journal in August, Edwards responded by divesting his Fortress portfolio of funds tied to subprime mortgages. He also helped the Association of Community Organizations for Reform Now, or ACORN, a nonprofit organization helping low- and moderate-income families, launch a Louisiana Home Rescue Fund. He provided much of the $100,000 in seed money for the program, which gave loans and grants to families whose houses were foreclosed on by lenders, including in some case ones with ties to Fortress.

Still, Edwards sounded defiant when he was asked whether he regrets the work for Fortress.

“I don’t apologize,” he said. “Nobody ever gave me anything. I worked my rear end off, and I’ve been able to have some good luck and success in my life. I want everybody in this country to have this chance. I wanted my kids to have a better life. My parents wanted me and my brother and sister to have a better life. There’s nothing wrong with that. That’s America.”

Boston Globe 11/15/07
http://www.boston.com/news/nation/articles/2007/11/15/a_dark_diagnosis_reaffirmed_a_commitment/?page=6

I really would like to be able to like John Edwards. He more than any presidential candidate carries the banner of economic populism and speaks to the issues I care most about. But he also seems just a tad too slick about making excuses. That’s been very much on display after a recent NY Times investigation of a DC-based non-profit he created in 2005. Rather than just explain the financial dealings that had been brought into question, Edwards rallied his supporters to denigrate the reporter’s integrity. He has erected such ridiculous straw-men that you’d think you were listening to a Fox News commentator.

I haven’t been buying Edwards’ huffing and puffing. In fact, I had a strong hunch from the outset that Edwards tried and failed to play a cheesy game of bait-and-switch with the Times…and he was using that failed stunt to rally his supporters. This evening, I discovered that my original hunch was exactly right. It doesn’t exactly redound to Edwards’ credit.

This whole matter is becoming increasingly shabby. Left-wingers are so sick of seeing Democrats smeared by the big right-wing Noise Machine that many sprang instinctively to Edwards’ defense, unwisely I believe. Certainly the epithets you see flying around the internets are unwarranted. The facts don’t look very good for the candidate, and perhaps that is why he has concentrated instead on pounding the table.

Unbossed 6/25/07
http://www.unbossed.com/index.php?itemid=1594

RENO, Nev. (AP) — Democratic presidential candidate John Edwards said his nonprofit anti-poverty center’s activities have been “completely legal” and he does not plan to go beyond the legal requirements to disclose its donors.

Speaking to reporters after a town hall meeting Saturday night in Reno, Edwards denied accusations that the Center for Promise and Opportunity has been used to promote his presidential campaign.

Edwards noted his efforts on behalf of the center to raise the minimum wage in states, help low-income students attend college, organize workers into unions and engage young people in the fight against poverty.

“All of this was an effort to try to deal with the issue of poverty in America, which is the cause of my life,” he said. “What I’ve been doing is not only significant and there’s nothing wrong with it, it’s something I’m very proud of. Everything we did was not only completely legal but we did a lot of good.”

The nonpartisan Center for Responsive Politics, a Washington-based research group that tracks money in politics, has suggested Edwards used the nonprofit to help his presidential campaign and has pressed him to disclose its donors.

Asked whether he would comply with the request, Edwards replied, “I will do whatever the law provides. That’s what I do on all these things.”

Unlike exploratory committees and political action committees, Edwards’ nonprofit is not subject to the Federal Election Commission’s strict transparency and oversight rules that require disclosure of expenditures and the source of donations.

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Associated Press
http://hosted.ap.org/dynamic/stories/O/ON_THE_2008_TRAIL?SITE=VTBUR&SECTION=HOME&TEMPLATE=DEFAULT

(AP) When John Edwards pursued his crusade against poverty in 2005, he created a nonprofit center that allowed him to maintain a high profile _ and avoid the legal scrutiny of presidential candidates.

snip: With the nonprofit, though, there were no limits on the amount of money Edwards could raise, either from individual donors or overall.

snip: “The FEC may take issue with Edwards if he had already made up his mind to run as a candidate and there was an intentional effort to utilize an outside nonprofit to float the campaign for a while,” Thomas said.

snip: Edwards did have a political action committee. But unlike the nonprofit, his One America Committee was subject to the FEC’s strict transparency and oversight rules that require the disclosure of expenditures and the source of donations.

“Since it does appear that candidate Edwards was using his nonprofit to build his national profile up to his presidential campaign, it would be nice to know who was backing and who was financing that,” Ritsch said.

snip: Bradley Smith, a former FEC chairman appointed in 2000 by President Clinton, said Edwards shouldn’t face any trouble from federal regulators unless he was explicitly campaigning for the Democratic nomination.

Edwards traveled to Iowa and New Hampshire at least four times each in 2005.

He took care not to say he was running until late 2006, after a year in which he spent much of his time traveling in early primary states, particularly Iowa. He visited the Hawkeye State more than a dozen times before announcing his candidacy.

Because the nonprofit has yet to file its IRS report for 2006, its not clear how much it supported Edwards or his staff that year. Much of his travel was funded by the One America Committee, a political action committee that spent $1.56 million to fund travel officially aimed at supporting Democratic candidates in the months leading up to the 2006 election.

It wasn’t until Jan. 3 that Edwards, almost a week after kicking off his second bid for the White House from the front yard of a Hurricane Katrina-ravaged home in New Orleans, filed the paperwork to open “John Edwards for President,” his official campaign committee, with the FEC.

“We all know that he was a candidate for president, but if he wasn’t going around saying, ‘I’m running for president,’ he’s probably all right,” Smith said.

CBS News

http://www.cbsnews.com/stories/2007/06/22/ap/politics/main2967581.shtml

The New York Times has reported that there is gambling in the back room of the permanent presidential campaign. The New York Times story is, of course, a serious report about an important issue. But, it is news only in the sense that this time it’s John Edwards with his complex structure of tax exempt entities and election campaign vehicles.

Since at least the 1988 primary, presidential candidates have been availing themselves of the disclosure shield, deductibility of contributions, freedom from limitations on sources and amounts of money, and the benefits of complexity itself by moving money among related entities.

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The deafening silence on the underlying issue–the abuse of exempt entities as campaign finance intermediaries–is all the more remarkable in light of the ferment surrounding the exempt sector and the exposure of the consequences of inattentive boards for such exempt entities as The Smithsonian Institution, the Getty Museum, the Nature Conservancy, and American University. This is certainly not an exhaustive, or even particularly inclusive list, but it shows that the problems in the exempt sector are not limited to marginal institutions. The problems are at the heart of the exempt sector.

While these scandals were about the use of exempt entities for personal greed, these scandals are at bottom about the failure of boards of directors to do their duty to put the interest of the organization’s exempt mission and the interests of its beneficiaries first. The same can surely be said of the boards of entities that allow a candidate to fund a campaign with exempt funds or of boards that allow a manager, who is often the organization’s founder, to curry favor with the powerful by moving money at their behest.

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The deafening silence on the role of exempt entities in election campaigns is doubly remarkable in light of the ferment surrounding elections since 2000. The legacy of this debacle has been almost surreal. In a country that has sat silently while the government launched an unprecedented assault on civil liberties, where the Justice Department devoted itself to denying minority voting rights through unfounded charges of fraud, where the Election Assistance Commission altered a report that had concluded that voter fraud was minimal, and where no one will ever know which candidate in fact was elected President in 2000, the major First Amendment issue has been the right of big donors to abuse exempt entities and the right of rouge exempt entities to traffic in their exemption in the interest of keeping campaign contributions secret from the voters but not, of course, from the candidates.

In this debate, most reformers and reform organizations have become not watchdogs but the functional equivalents of an inattentive board. The role of section 501(c)(3) public charities, of section 501(c)(4) social welfare organizations, of section 501(c)(5) labor unions, and of section 501(c)(6) trade associations as financing intermediaries for candidates and parties has been willfully ignored. While reformers have overcome their initial reluctance to address issues related to the section 527 organizations that are still not treated as political committees under federal election law, few are willing to examine the activities of the section 501(c) organizations. Few have been willing to look squarely at the role of exempt entities in the Abramoff follies, preferring instead to treat Abramoff as either a bad apple or as the worst apple in a suspect barrel of lobbyists.

The result of the silence of the reformers is that the Edwards report is greeted with concern but even the usual suspects are not rounded up. Edwards is not innovative, he is mainstream. The headlines will blow over and his electoral fortunes will be unaffected by the passing static. Other stories will appear about other candidates, whether for president or Congress or governor or state legislature or mayor.

Campaign Legal Center 6/22/07
http://www.clcblog.org/blog_item-139.html

John Edwards ended 2004 with a problem: how to keep alive his public profile without the benefit of a presidential campaign that could finance his travels and pay for his political staff.

Mr. Edwards, who reported this year that he had assets of nearly $30 million, came up with a novel solution, creating a nonprofit organization with the stated mission of fighting poverty. The organization, the Center for Promise and Opportunity, raised $1.3 million in 2005, and — unlike a sister charity he created to raise scholarship money for poor students — the main beneficiary of the center’s fund-raising was Mr. Edwards himself, tax filings show.

A spokesman for Mr. Edwards defended the center yesterday as a legitimate tool against poverty.

The organization became a big part of a shadow political apparatus for Mr. Edwards after his defeat as the Democratic vice presidential nominee in 2004 and before the start of his presidential bid this time around. Its officers were members of his political staff, and it helped pay for his nearly constant travel, including to early primary states.

While Mr. Edwards said the organization’s purpose was “making the eradication of poverty the cause of this generation,” its federal filings say it financed “retreats and seminars” with foreign policy experts on Iraq and national security issues. Unlike the scholarship charity, donations to it were not tax deductible, and, significantly, it did not have to disclose its donors — as political action committees and other political fund-raising vehicles do — and there were no limits on the size of individual donations.

snip: But it was his use of a tax-exempt organization to finance his travel and employ people connected to his past and current campaigns that went beyond what most other prospective candidates have done before pursuing national office. And according to experts on nonprofit foundations, Mr. Edwards pushed at the boundaries of how far such organizations can venture into the political realm. Such entities, which are regulated under Section 501C-4 of the tax code, can engage in advocacy but cannot make partisan political activities their primary purpose without risking loss of their tax-exempt status.

Because the organization is not required to disclose its donors — and the campaign declined to do so — it is not clear whether those who gave money to it did so understanding that they were supporting Mr. Edwards’s political viability as much or more than they were giving money to combat poverty.

snip: Mr. Edwards depended for his activities in large part on donations from supporters. In addition to the two nonprofit organizations, he created a leadership political action committee and a 527 “soft money” organization that also shared the same name: the OneAmerica Committee. These two committees each allowed donors to give more than the $2,300 per person limit in a presidential primary or general election, and, in some cases, to give in unlimited amounts.

From 2005, when he established them, through 2006, the committee and the soft money organization raised $2.7 million, most of which paid for travel and other activities that helped Mr. Edwards maintain his profile.

“It’s a permanent campaign,” said Meredith McGehee, policy director at the Campaign Legal Center, a nonprofit group based in Washington. “It’s about shaking every money tree possible and finding every means to finance a permanent campaign. It’s like having different checking accounts, with different rules, and the goal of keeping your name and agenda in the public eye.”

snip: Mr. Edwards also developed mutually beneficial relationships with public and private institutions. He founded the Center on Poverty, Work and Opportunity at the University of North Carolina, which provided him with a platform. In return, he raised $3 million to sustain it. He was hired by the Fortress Investment Group, a New York hedge fund, to “develop investment opportunities,” according to a 2005 Fortress news release. That led to meetings with such people as Chancellor Angela Merkel of Germany; Henry Kravis, founder of KKR, one of Wall Street’s most successful investment funds; and the chief executives of General Electric, Citigroup, Coca-Cola and DaimlerChrysler.

“Fortress became a vehicle for foreign travel,” Mr. Turlington said, “but it was also a way to spend more time with sophisticated financial people.”

The Edwards campaign declined to disclose the amounts raised or spent by the two similarly-named nonprofit agencies — the Center for Promise and Opportunity and the Center for Promise and Opportunity Foundation — since their 2005 tax filings, which are the most recent to have been filed.

snip: Nonprofit groups can engage in political activities and not endanger their tax-exempt status so long as those activities are not its primary purpose. But the line between a bona fide charity and a political campaign is often fuzzy, said Marcus S. Owens, a Washington lawyer who headed the Internal Revenue Service division that oversees nonprofit agencies.

“I can’t say that what Mr. Edwards did was wrong,” Mr. Owens said. “But he was working right up to the line. Who knows whether he stepped or stumbled over it. But he was close enough that if a wind was blowing hard, he’d fall over it.”

Of the explicitly political entities, Mr. Edwards’ OneAmerica Committee 527 organization allowed donors to give without limitations. The money was transferred to his leadership political action committee. Leadership committees were initially created to allow prominent politicians to raise money for distribution to needy office-seekers. But Mr. Edwards spent the entire $2.7 million he raised for OneAmerica, including $532,000 raised by the 527, on himself, an increasingly common trend among politicians.

The New York Times

http://www.nytimes.com/2007/06/22/us/politics/22edwards.html?_r=1&hp&oref=slogin

snip: In adopting poverty and low-wage work as his themes, Edwards has struck a far more combative, populist tone than in his 2004 presidential campaign. And that has helped him elbow into the top tier of a campaign field dominated by better-financed candidates Hillary Rodham Clinton and Barack Obama — and has even boosted him to a lead in polls in the key early-voting state of Iowa.

snip: … That appeals to Iowa Democrats,” said former state party Chairman Gordon Fischer, who is not affiliated with any candidate. “It’s the kind of throwback that appeals to traditional Democratic values.”But Edwards’ focus on the disenfranchised has also left him open to allegations of hypocrisy. Wealthy from his career as a lawyer, Edwards has been pummeled by reports that he spent $400 for a haircut, built himself a 28,000-square-foot mansion on a 100-acre estate, and did consulting work for a hedge fund that traffics in offshore investing of the sort he has criticized.”It has hurt him, and I say that as someone who admires and respects John Edwards a tremendous amount,” said Fischer.

snip: In the years after he and Kerry lost the 2004 election, Edwards has labored to establish himself as a champion of the disenfranchised. He established a research center on poverty at the University of North Carolina, which gave him a platform for speaking to important Democratic constituencies around the country.

“The poverty center was a significant piece of infrastructure that kept him in the national dialogue,” said Ferrel Guillory, an expert on Southern politics at the University of North Carolina.Edwards also established two nonprofit organizations to develop and run anti-poverty programs, including one that helps poor students in North Carolina pay for college. The groups also helped him maintain ties with campaign lieutenants and donors, several of whom helped run and finance the nonprofits.

snip: A pillar of his plan is to give low-income families housing vouchers so they can move into better neighborhoods. Similar programs were tried in the 1990s to mixed effect. Research on a Clinton-era program found that the vouchers led to improved health and safety for participating families, but not to increased employment or income levels. Edwards has also proposed a “work bonds” program to help low-income workers build assets, by matching some of their wages with a tax credit that would be put into savings accounts. He wants to create 1 million jobs for the jobless and to start a college tuition-aid program like the one he established in North Carolina.

It is not clear whether Edwards’ message is reaching far beyond the political elite and activist core: In a recent poll by the Pew Research Center, Edwards was regarded as the most conservative candidate in the Democratic field. And though Edwards is connecting with labor activists, he does not appear to be catching on among minorities who might seem like a natural constituency: A recent Los Angeles Times/Bloomberg poll found that most blacks supported Sens. Clinton or Obama, with only negligible support among blacks for Edwards.

snip: His message of economic populism and strident opposition to the Iraq war may not be well-received everywhere, but it seems to be working in Iowa, where Edwards is leading in many polls. “Edwards is the perfect Iowa candidate,” said William A. Galston, a former advisor to President Clinton. “But if he cannot win Iowa, he is dead.”

LA Times

http://www.latimes.com/news/politics/la-na-edwards28may28,0,2576743.story?coll=la-home-center

The Associated Press just moved a story from an interview it had with Edwards today, during which he said he worked for a Wall Street hedge fund after the 2004 election “primarily to learn, but making money was a good thing, too.”He wanted, Edwards told AP, to learn more about financial markets and their relationship to poverty in the USA.

The AP adds that:

Edwards said it’s legitimate to ask questions about whether there is a contradiction between campaigning against poverty while working for a hedge fund that is designed to make rich people richer. He said the job was a compliment to his position as the head of a poverty center at the University of North Carolina.

“I didn’t feel like I understand, and to be honest with you still learning right now, sort of the relationship between that world and the way money moves in this country through financial markets,” Edwards said.

USA Today

http://blogs.usatoday.com/onpolitics/2007/05/edwards_says_yo.html

Former Democratic vice presidential candidate John Edwards gave a stump speech in the Hill District yesterday, saying Wal-Mart, the retail giant, underpays its workers.

In an appearance reminiscent of his quest two years ago for the Democratic presidential nomination, Mr. Edwards, a former U.S. senator now working with an anti-poverty program in North Carolina, called for national health care, and later predicted gains in the House and Senate for his party.

The speech was part of a nationwide tour by a group called Wake Up Wal-Mart, which is demanding that the company provide better pay and more health care for its more than 1 million employees.

snip

Still regarded as a potential candidate for president in 2008, Mr. Edwards was himself once an owner of Wal-Mart stock. He sold it during his presidential bid two years ago.

Pittsburgh Post-Gazette, August 5 2006
http://www.post-gazette.com/pg/06217/711365-85.stm