Today, Metcalf's interview with Levin details not only Landmark's case against the NEA, but also the players -- the people and organizations -- involved in this matter.

By Geoff Metcalf

Question: This discovery of yours could be considered payback personified.

Answer: Yup.

Q: Please explain for our readers what Landmark Legal Foundation discovered in these revealing documents you got your hands on?

A: All right. First of all there are a whole bunch of documents that the federal Election Commission got during a four-year investigation of the AFL-CIO and the Democratic National Committee. Somebody -- I believe the Republican National Committee -- filed a complaint saying basically, "Hey look: This is a violation of the campaign laws that this union and the Democratic Party are coordinating campaign activities -- and that is not permitted under our campaign laws."

Well, a federal judge decided that it was permitted. So whatever we think about the campaign laws wasn't exactly a fruitful area to pursue.

Q: So what did you do next?

A: When that ruling came out in July of last year, we contacted the FEC and we told them, "We want you to release all the information that you collected through subpoenas from whatever parties you subpoenaed and make it public as you normally do."

Q: How did the FEC respond?

A: Well, they said, "We have a microfiche problem. There are so many documents and so forth." So we pressured them and pressured them. Then, we threatened them with a lawsuit. Then, on May 2nd of this year, all of a sudden, they released over 6,000 of them and when we contacted them on May 2nd they said, "They are open. You can come and make some copies." So we went in on May 2nd and May 3rd and ...

Q: ... and then you had an early Christmas!

A: (laughing) Yeah. That's right. Our main focus in this area is on the NEA. We went in and we copied all documents relating to the National Education Association. Understand, they were not investigating the National Education Association. They were investigating this coordinated activity between the AFL-CIO and the DNC. But the NEA is the most powerful, the largest and the wealthiest union in America -- it's got 2.6 million members -- and the AFL-CIO is a combination, sort of an overarching group of several unions, like the Teamsters and so forth. The NEA is the most powerful, so their name pops up all over the place. So we copied those materials and we took them. Then, four days later, the Federal Election Commission put them back under seal under pressure from the NEA and the AFL-CIO.

Q: OK, so you got your hands on the documents before the judge resealed them. What did you find?

A: When we went through them, we said, "Good Lord!" It is Christmas time in May -- as you said.

Q: I was blown away when I found out that the NEA wasn't only a participant in a lot of the party-platform things, and so forth, but actually had veto power.

A: That's the point! This is the structure. They sent up a national coordinating committee -- steering committee -- this is where the wealthiest, most powerful, most influential members sat. They were from the Democratic National Committee in 1996 these documents talk about. They were from the Democratic Senatorial Committee, the Democratic Congressional Committee (meaning the House races), the 1996 Clinton-Gore Committee, the AFL-CIO, Emily's List and, of course, our friends at the NEA. They sat on this national coordinating committee steering committee and they decided what the issues would be, how much money would be spent and what the strategy would be.

Q: What is so amazing and appalling was they actually withheld their financial commitment until they had input into the policy.

A: Into the policy at the state level. They set up 50 of these same kinds of steering committees in every state where, typically, the state Democratic party and the affiliates of these national unions -- like in Pennsylvania, the Pennsylvania State Education Association and so forth -- would sit on these state committees. Candidates would contribute to these committees and these committees would help decide what the strategy would be in congressional races, in gubernatorial races, senatorial races -- they would pull the strategy together and then they would send it up the ladder to this national committee, we were talking about and this national committee could approve it, modify it, or reject it.

Q: Mark, what is so astonishing is allegedly these people are smart enough to execute this scam and to get the control over the process -- and the essence of it is the process -- but they could still be stupid enough, myopic enough or arrogant enough to not report any of that? Did they report any of this stuff to the IRS?

A: Well that's a good question. Under the Internal Revenue Code, if you are not a tax-exempt organization -- and many people do not know this: Unions are tax exempt, they don't pay taxes -- but if they spend one plug nickel on political activity intended to influence races at the national, state or local level, outside their own union, they have to report that on their income-tax forms and pay a corporate income-tax rate on those expenditures. Now their tax forms are public. So we went back and got all the tax forms for the National Education Association, from 1994 up until the most recent one that they filed in June. And on every one of those federal tax returns they said that they spent zero money on political activity.

Q: Hold on here. It is easily documented that they spent millions and millions of dollars ...

A: They spent millions for sure.

Q: I remember reading about some $35-million in union money directed at the DNC ...

A: The AFL-CIO -- see it's not clear where that money is coming from. They've got a big shell game going on. If you say where is "that money," they say, "Well it's in a PAC." Of course, political action committees can spend it.

Q: Yeah, but what happens if you follow the chain of custody of that money? Where did it come from? Did it come from union dues?

A: That's the point. Here's what I'm saying: If you look at the NEA budgets (which we have) and strategic plans (which we have), they are using their membership dues -- which is the general operating money, the tax exempt money -- and funneling it into political activity. That's what their own documents say.

They say, $300,000 and some odd dollars to coordinate with local democratic candidates. They're the ones who say in 1996 they spent $9.6-million for a wide array of political activity. And they spend tens of millions of dollars every year -- and this is important and it wasn't covered in the news articles -- they spend tens of millions on what are called "uniservers."

A uniserver is an NEA employee, way down at the school district level, in every school district. Ostensibly they are supposed to be helping with contract negotiations and grievances and so forth -- but the other part of their job is they are the biggest army of precinct workers in America. These people help organize political activity for the NEA right there at the school district level. They don't report any of those salaries on their federal tax returns either. All that information has now been compiled and filed with the Internal Revenue Service and we are asking them to conduct an audit and to force these people to do right by the law.

Q: Before we get into the heavy nitty gritty, you filed two complaints -- one with the IRS and one with the FEC -- right?

A: Well, last summer we filed two complaints, as you said. One with the IRS and one with the FEC after going through a bunch of the NEA budgets and strategic plans and handbooks. We also filed against several state affiliates. This year, we have used the information we gleaned from the Federal Election Commission search that is under seal now -- as well as some new information relating to the NEA's spending and the spending in a half dozen or so states such as North Carolina, Pennsylvania, Minnesota, Kansas, Nebraska -- and we've taken that information and filed it against those state affiliates of the NEA as well.

Q: What, if any, reaction or comments have you had back from the IRS? I read news stories in which IRS types say, yeah under normal circumstances they are compelled to report this kind of spending. What, officially, have you heard from either the IRS or the FEC?

A: Two things: First, with respect to the IRS, they are not allowed to tell us anything really. There is a section in the Internal Revenue Code, 6103, that prohibits them from acknowledging any audit of any kind. Hopefully what we are doing is prodding the media to continually contact the NEA and ask them if they are being audited. In the past they have said, "Oh, of course not!" So, if we now get a "No comment!" from them, we know they have some problems.

But the best news you just touched on was in the Associated Press article in which the current head of that part of the IRS that oversees non-profit organizations, like the unions, basically said, "Look -- based on the public record some of this stuff looks like it goes over the line." And another long-term IRS official who writes manuals for tax-exempt groups on how to comply with the law said he wouldn't be surprised at all if they were audited.

Q: I've been involved in some political activity stuff and we have always avoided 501 (c) (3)s specifically because they don't give sufficient protections -- and it's frankly easier to go with a for-profit corporation and spend everything.

A: Right.

Q: But with a 501 (c) (3), when they transfer their own funds to some separate segregated something like a PAC ...

A: ... they have to report it.

Q: You betcha! And since 1994, the union hasn't. Now that brings up the next question -- prior to 1994, did the NEA report political activity and spending?

A: Have no idea. We haven't gone back that far. You have to understand: We've got two offices full of NEA stuff. We're just not in a position to go any further back. There is also some question whether the IRS is in any position to go any further back than six years. My understanding is if they do audit the NEA, they only have 50 or 60 auditors for non-profit groups, or in that ballpark, we've been told. They'd have to take around 10 percent of them to look at the NEA.

Q: Hey, the potential return on the investment of the resources would be well worth it.

A: I told them when you're done auditing all those conservative groups, maybe you can spend a little time on the NEA. You're exactly right. For example, what happened with the Heritage Foundation about four years ago was that a former Democratic congressman, David Skaggs, from the Boulder Colorado area, read an article in the Miami Herald that bothered him. He cut it out, attached his letter to it, sent it to the IRS whining about the Heritage Foundation and 30-days later they launched what turned out to be a four-year audit of the Heritage Foundation -- based on a newspaper article.

Q: Hey, my boss -- Joseph Farah and the Western Journalism Center -- got audited. And when he asked why they were asking the kind of questions that were not financial in focus, the dumb auditor reportedly told him, "This is a political thing."

A: First of all, your boss Joseph Farah is one of the great rebels on this cause and I definitely appreciate it. He's a very courageous guy and a good friend, he and his wife. So the IRS, I think, is going to have a problem not doing something now when their own boss, in the newspaper, speaks to it -- which is really quite unusual. We sent him the equivalent of two Manhattan phone books full of indisputable evidence -- copies of original documents ...

Q: ... and arguably doing half their auditors' work for them.

A: Wouldn't that be nice if we could get paid for that? But that's exactly right -- and you raise another good point. Who is looking at this? Who is in control of the whole process in the United States? We have filed it with the IRS. The FEC is toothless. Where is Congress? You've got John McCain running around yelling about campaign finance reform -- nothing that he proposes does anything about what the NEA is doing -- or what the AFL-CIO for that matter ...

Q: Mark, come on -- be real. Congress doesn't have the stones for this. They'll talk the talk, but they don't want to get anywhere near the essence of something that would eviscerate their checkbooks.

A: I can understand that the Democratic Party, as is clear from our documents, has essentially become a wholly-owned subsidiary of the NEA and the AFL-CIO.

Q: What I don't understand is why the Republicans don't seize this as a target of opportunity to rub their nose in it?

A: They might -- some of them might. What concerns me is this has been going on for year after year after year -- and you would think, for self defense purposes, they would want to know something about this. The problem is the NEA funds the campaigns of some of the more liberal Republicans and assists them -- like Arlen Specter, and maybe a few in New England and so forth, so they're not as likely to want to look into this.

But this is really not a Republican or Democratic issue in the sense of wanting to make sure that the membership dues are spent honestly. Look, the NEA has 2.6 million members. Also, non-members have to pay fees in certain states to the NEA. The question for all these members, Democrat, Republican, liberal, conservative and everything in between is, "Aren't you paying your dues because you want your union to represent you?"

Q: I can't tell you how many complaints I get from union members that are upset because they might embrace conservative principles and yet they are compelled in many cases to actually take time off without pay to participate in some kind of political activity they were instructed/ordered to do. The Beck Amendment was supposed to mitigate some of that.

A: I agree. But I would think even liberal Democrat members would want their money used to help get advice on contract negotiations and things of that sort -- not money funneled from the NEA to a state for political activity in some local race. These are serious matters -- and if I was a NEA member, spending as much as I would on dues -- in some states you can go over a thousand dollars, I wouldn't want them wasting my money on politicians and political activity.

Q: Unfortunately, it is the union leadership that has that symbiotic connection. I was amazed and absolutely blown away to read recently that the union honchos actually sat on committees and had veto power.

A: Yup.

Q: We used to think the tail was wagging the dog -- hell, they are the dog!

A: Yeah. The Democratic National Committee has these newspaper articles in which we read, the Republican Party has raised this amount, the Democratic Party has raised that amount -- that doesn't tell the whole story. In that recent Associated Press story, they mention that the United States Chamber of Commerce also spent $14 million on political activity ...

Q: But they reported it ...

A: They reported it and paid taxes on it. The National Association of Manufacturers was another one that spent between five to six million dollars, they reported it, and paid taxes on it. But all this under the radar stuff is -- well, you can understand why they want to keep it under seal. They don't want anyone to know, not their members, not the IRS, not anybody.

Q: Who sealed these documents after you initially got your hands on them?

A: First the FEC -- and then they were prepared to release thousands more but the AFL-CIO and the DNC went into federal court and got a Clinton judge, who actually has a Labor Union background, and she put in place a grant of their motion for a preliminary injunction which simply means she forced the government to keep these documents under seal. Not just the FEC -- if Justice had them , all these groups -- and she has scheduled a hearing for sometime in October.

Q: Mark, has the FEC responded to your complaint yet with a hearing date or anything like that?

A: No. The FEC is notoriously slow. We got a letter from them last year saying they had received our complaint -- and that's par for the course.

Q: And the IRS isn't supposed to tell you anything?

A: The IRS isn't supposed to tell us -- I'm not a fool when it comes to the IRS -- but I suspect they are going to have to do something and they are going to have to do it relatively soon.

Q: Several people have suggested/recommended that you make sure to copy and back up all these documents you have in some secure cyber/digital/lock box and that you maintain real good fire insurance.

A: Well, we've got 400 of them, so they are going to have to track them all down in a nice bound copy from one end of the country to the other.

Q: It has also been suggested that if or when the Republicans speak out on this scam, their co-conspirators in the mainstream press from the New York Times to Dan Rather will respond with the spin "GOP Attacks Teachers." And the NEA will lean on their members to put pressure on elected officials because if or when they are compelled to pay interest and penalties, the union will be forced to come back to the members to get more money to pay the potential fines.

A: My only problem with that analysis is the Republicans aren't getting a heck of a lot out of this now, are they? What's to lose really? We don't coordinate with them -- unlike the unions -- we don't take our lead from them or, if we did, we would have gone out of business a long time ago.

Q: How can people find you if they want to either help you or get more information?

A: The best way is always online. You can find us and you can find this complaint and the additional casework we are involved in. Our phone number is (703) 689-2370. We don't harass folks for money. We generally send out a newsletter four or five times a year.

Q: This has been percolating for a while. The FEC -- well, they're the FEC -- we don't really expect much from them. But the IRS will probably be compelled to do "something." I also would think that somewhere along the line -- just based on my personal interaction with union members upset with unions spending money on stuff that is the antithesis of what certain members embrace -- that there could potentially be a class-action suit somewhere?

A: Well, I guess there could be some kind of fraud theory. But we already have the template laid out in the Beck decision. They already have a constitutional right to demand their money back -- and to demand an accounting for it.

It would seem to me you would want to go through that process first and, if you come up empty, you would consider some kind of civil action based on fraud. Because if they are going to go back to all these teacher union members and say, "Sorry, we don't spend any money on politics," well, we have exhibits that say they do.

And, by the way, it's too expensive to reproduce them and send them all out, but we're happy to send a few of them out to some people. Like I said, we've sent out 400 of them at considerable expense. But we wanted to make sure that they got to different parts of the country for people to examine.

Q: One of the NEA lawyers was very, very confident that they had complied with the law. Well, I've read the law, and I know lawyers can argue anything -- that's what they get paid for -- but it seems that dog ain't gonna hunt if you ever get this stuff before a judge.

A: I've never met an opponent who wasn't confident going into the fight -- and in nine cases out of ten, they sulk away with their tails between their legs. The NEA is an extremely powerful force with enormous resources. They are very cocky. And I'm glad they're confident because, if I were them, I'd be a little less so.

Our position is simple. We're not the IRS. We're not the U.S. Attorney. We're not a federal judge. We can't make the final decision about the NEA. But we can bring this information to the public, to the NEA membership and to the Internal Revenue Service and demand that they treat the NEA at least the way that they treated Joseph Farah, the National Rifle Association, the Christian Coalition and scores of other non-profit and for-profit organizations.

Q: This original investigation that these damning documents resulted from was looking at the AFL-CIO. I know you are focused on the NEA, but the obvious question is: "Does the AFL-CIO file these IRS form 990s?

A: Yeah. Every union files one. Every non-profit ...

Q: ... except the NEA?

A: No, the NEA files one but on that line -- line 81 -- where they are required to report the amount of money they spent on political activity, they put zero. The Associated Press went back and checked the AFL-CIO tax returns for the same period in which all this money was being spent and all this coordinated activity was going on -- and the AFL-CIO reported zero also.

And they are not only supposed to report the amount of money on that form, but then, typical of the IRS, there's another form, in which if it's anything more than zero, you're supposed to give a detailed explanation of your expenditures and where the money is coming from and so forth.

Q: OK, if the AFL-CIO is guilty of the same oversight as is the NEA, how come you haven't filed an IRS complaint or a FEC complaint against them?

A: We just learned about this. And there is another group that is taking a very close look at that piece of the equation because there are a number of groups and none of us are that big. The National Legal and Policy Center which has been eyeballing the AFL-CIO for something like a decade and a half.

Q: The AFL-CIO's skirts may be dirty. But it was just a few weeks ago that everyone was shocked and amazed when President Bush was struggling to get approval for the energy development in that little section of the park up in Alaska, it was (and correct me if I'm wrong) the AFL-CIO that stepped up and supported the drilling.

A: I understood that union, the grandmother and grandfather of all unions, sat on the sidelines but it was the Teamsters who stepped in. I could be wrong, but that's my understanding. Of course, that's a great opportunity with respect to the environmental groups and the hardworking blue collar out there ...

Q: Over the years I have gotten very, very cynical about this kind of stuff. I don't believe anything happens in politics by coincidence. Traditionally, all those unions have been in virtual lock step with the Democratic party and if they say the sun will rise in the northwest tomorrow morning, that's the party line.

A: Yeah, well, you might be right. But the Teamsters are a little different though. The Teamsters endorsed Reagan. I remember that because I worked on that campaign in 1980. Generally speaking, I think you are right. And I think what you're saying is the fix is in -- nothing is going to happen.

Q: That's the feeling I have. When it comes to campaign finance, these guys in the 87 square miles surrounded by reality will talk the talk, but they don't want to mess with the system. It's the mother's milk of their existence.

A: If that's true -- and no amount of evidence of potential fraud or improper conduct is going to persuade even the Internal Revenue Service, which has a penchant for investigating even innocent people, to do its job -- then pretty much all is lost.

Q: And the republic is finished?

A: I'd say so. Let me say this. We are not done. We are going to continue to collect information. If another batch of this information is released, we're going to go through it -- and I just want to make it clear if any of these NEA types are listening -- we want them to know we are not done. We are going to stay on top of this. We don't care what the leadership says or what the leadership wants. They don't get to make all these decisions about whether they are complying with the law or not. We hope the membership agrees with us because it's an awful lot of money that's going unaccounted for. And the idea that the word politics doesn't mean politics -- I'm sick of that kind of stuff too, the idea that their own documents are lying and the idea that they didn't sit on this coordinating committee -- or as the official of sat on it for the NEA said, "I was just there gathering information." Information for what?

Q: And he had veto power over that information. OK, you've got the IRS complaint and the FEC complaint -- is there any prospect or any discussion or any interest from anyone -- even one of the gadflies in Congress -- a Ron Paul, Bob Barr, Jim Traficant -- anybody who might join you in calling for some kind of congressional hearings? Now we know it isn't going to go anywhere -- but is there any kind of congressional traction on this story at all?

A: So far -- I'm not going to get into who -- but there have actually been two pretty powerful committees that have asked for a copy of our information.

Q: I suspect the conventional wisdom would be they are scared spitless to ever take on the unions ...

A: I would normally agree with that. Except what the documents show is that the NEA is the Democratic Party. Normally, where these Republicans would cower -- and they often do -- now, it's a question of self-defense. I'm really trying to keep this out of the partisan arena because I really think what is being done here is a violation of law regardless of who is involved. But I will tell you that two very powerful committees have contacted us -- we have provided them with the information and they are now investigating. But we don't rely on Congress to get the job done.