Federal Probe of Sharpton’s Finances Dropped

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The New York Sun

Federal prosecutors have decided not to seek criminal charges against the Rev. Al Sharpton over his chronic tax problems, but the fiery civil rights activist isn’t walking away unscathed from his latest fight with Uncle Sam.

The probe was disbanded only after the government received a down payment today topping $1 million on a tax debt that had threatened to land Sharpton before a grand jury, the minister’s lawyers said today.

More payments will follow as Rev. Sharpton clears up a decade’s worth of delinquent tax bills related to his personal business interests and his Harlem civil rights group.

Prosecutors and IRS agents spent months investigating Rev. Sharpton’s finances but ultimately concluded that his tax problems were better handled as a civil matter, his lawyers said.

The IRS and New York state and city tax agencies claim that Rev. Sharpton and his organization, the National Action Network, collectively owe millions of dollars in back taxes and penalties.

Rev. Sharpton, who was defiant when the probe became public in December, claiming it was part of a government smear campaign, sounded a more contrite note today.

He said both he and the civil rights group would clean up their books and complete a reorganization intended to ensure the group’s long-term fiscal stability.

“We learn from every experience to be more cautious, more accountable,” he told The Associated Press.

A spokesman for the U.S. attorney in Brooklyn declined to comment.

The investigation was the latest in a string of government inquiries into Rev. Sharpton’s finances, dating to his earliest days as a civil rights figure.

Each time, he has emerged intact. In the late 1980s he was acquitted of stealing from a nonprofit group. A state case accusing him of evading income taxes also fizzled; he pleaded guilty to a misdemeanor charge of failing to file a tax return and paid a small fine.

This latest investigation became public when several of Rev. Sharpton’s aides received grand jury subpoenas. Law enforcement officials said the inquiry focused on potential tax violations, as well as possible election law violations during Rev. Sharpton’s 2004 presidential campaign.

The probe was prompted, in part, by Rev. Sharpton’s notoriously slipshod record keeping.

For years, his National Action Network failed to file income tax returns, obtain workers compensation insurance, pay the appropriate amount of payroll tax, or disclose how much it was collecting in donations or paying its top employees.

Rev. Sharpton’s personal record keeping was also in a chronic mess.

In recent years, his income has skyrocketed, due to lucrative speaking engagements, book royalties, TV appearances, and a nationally syndicated radio show. That show, alone, earns him several hundred thousand dollars a year.

Yet, his old tax debts remained unpaid and piling up interest.

Rev. Sharpton’s new attorney, Zachary Carter, a former federal prosecutor, acknowledged that the debt had not been handled properly.

“Things had not been managed in the past as competently as you would like,” he said. But he said Rev. Sharpton was no scofflaw.

“This was not a failure of will, in terms of paying taxes,” he said. “There was a good faith intention to meet these obligations. It was just a matter of getting attention focused on this, and making sure there was a concrete plan for getting it done.”

The exact amount that Rev. Sharpton owes has not been revealed by either the government or Rev. Sharpton’s lawyers, but there is evidence the debt is sizable.

The IRS obtained a $931,397 lien against Rev. Sharpton. City and state officials said he owned them another $933,577. Separately, the National Action Network said in its most recent tax filing that it owed at least $1.9 million in payroll taxes and related interest.

Rev. Sharpton said today he was glad to be in the clear. “I’m just grateful to God and my family, and all of our supporters,” he said.

The end of the criminal probe was first reported today by the New York Daily News.

Rev. Sharpton’s attorney, Michael Hardy, said he hoped the resolution of the investigation would silence suggestions that the minister was profiting personally from his nonprofit group.

“I think this really clears the air for everyone,” Rev. Hardy said.

According to public tax filings, Rev. Sharpton has drawn little or no salary from the National Action Network in recent years, taking just $4,860 in 2006, down from $93,636 in 2004.

The group pulls in more than $1 million a year in donations, including sizable contributions from corporations like Anheuser-Busch.


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