Shadow Government & Fronts

April 12, 1997--Earlier this year, the Washington Post featured a number of front page articles written by Charles Babcock concerning Gingrich's 501(c)(3) troubles. Babcock said questionable use of tax exempt organizations is central to Republican political strategy.

But Newt Gingrich is not the only Republican who misused tax exempt organizations. According to the report of Iran-Contra special prosecutor Lawrence Walsh, Ollie North used a tax-exempt organization to support the Contras.

The North and Gingrich stories are not two separate stories. They are connected. Strangely, although Washington Post writer Babcock is familiar with the connection, he has not reported it. But you can read about it here.

The story connecting North operatives with the 501(c)(3) Republican strategy involves a hostile take-over of Confederate Memorial Association by a network of North/Republican operatives and fellow travelers. The Confederate Memorial Association is a Southern historical society and a 501(c)(3) tax-exempt organization.

The Confederate Memorial Association has been around since the end of the Civil War, and it owns a prime piece of real estate just blocks from the White House in the Logan Circle historic district. The building is an imposing five-story Romanesque mansion known as Confederate Memorial Hall. Confederate Memorial Hall currently houses a Confederate museum and library which contains Civil War artifacts and rare volumes.

If the take-over attempt is successful, the North/Republican operatives will gain valuable assets--an old, respected institution, a prestigious membership list, and prime real estate. But CMA president and board chairman John Edward Hurley says the operation will gain what it wants even more--a beautiful front behind which it can run a nasty military/intelligence operation.

Mr. Hurley has been jailed and hit with fines and sanctions of over $400,000 because he has tried to stop this take-over. He may be going to jail again.

Back in the mid-1980s, several board members wanted to use CMA to support the Contras, and arranged for a "Freedom Fighter" night to be held in the Hall. Mr. Hurley said "No." The Contra supporters also made contemptuous remarks about blacks while at CMA functions and during visits to the Hall; one member of this group, Republican activist Richard Hines, toasted the KKK at the 1985 Annual Burns Night Dinner of the St. Andrew's Society of Washington, D.C.

"I wanted them out, and so did other members of the board. Our organization despises racism, and we wanted nothing to do with a violation of the tax code," says Hurley. Using CMA by-laws, Hurley and other members of the board of directors ousted the North/Contra operatives from the board, and placed restrictions on their use of Confederate Memorial Hall.

Tax-exempt 501(c)(3) organizations are prohibited from taking part in political activities, so in fact Hurley has been jailed and fined for his refusal to support the Contras and violate IRS tax codes. How can this be?

The answer is simple: The North/Republican operation has judges and lawyers who work the courts for them.

In the ten years of this take-over battle, Hurley has learned a lot about the North/Republican operation and its judicial support system (read about The Counsellors, below). He has put what he knows in court filings.

Judge's Conflict of Interest Questions

The judge currently presiding over the battle is John H. Bayly, Jr. of the Superior Court of the District of Columbia. Judge Bayly is a former Legal Services Corporation president, appointed by President Ronald Reagan.

As well as levying fines and sanctions and jailing Mr. Hurley, Judge Bayly is demanding that military/intelligence types be placed on the CMA board. Mr. Hurley charged Judge Bayly with conflict of interest, and asked the judge to recuse himself in December, 1994. Among other things, Hurley charged that two of his antagonists in the litigation before Judge Bayly were Baylyâs employees at the Legal Services Corporation, and that the plan for one legal case against Hurley was designed at LSC. Judge Bayly refused to recuse himself.

Now Mr. Hurley has developed new evidence of the judgeâs conflict of interest, and posted the material to the CMA website. New evidence of Judge Bayly's conflict of interest includes:

* Judge Bayly is a buddy of Mr. Hurley's opponent, Herbert Harmon, the lawyer for the take-over operation.

* Bayly and Harmon together run another 501(c)(3) organization, the Serra Club of Downtown Washington. D.C. [Bayly and Harmon are both Roman Catholics; the Serra Club operates under the auspices of the Archdiocese of Washington, for the purpose of increasing religious vocations among the Roman Catholic laity.]

* The Serra Club operates out of the office of Herbert Harmon's law firm, Harmon & Wilmont, in Washington, D.C.

(Mr. Hurley has posted documentation and photographs verifying this information on his webpage.)

Funny Money

While not revealing his Serra Club relationship with opposing counsel, Judge Bayly presides over this case. In the course of the proceedings:

* Judge Bayly ordered Mr. Hurley to pay approximately $27,000 in legal fees to Herbert Harmon, Judge Bayly's 501(c)(3) Serra Club buddy. He also ordered that approximately $3,000 be paid to Mr. Harmonâs clients for expenses.

* Mr. Hurley issued a subpoena for an itemization of Mr. Harmonâs legal fees. Judge Bayly quashed the subpoena. Mr. Hurley learned that lawyers for the National Credit Union Administration, a government agency, did the legal work for Mr. Harmon's clients on this matter.

* Judge Bayly vacated his first order, and issued a second: Mr. Hurley was to pay Mr. Harmon approximately $3,000 for legal fees, and approximately $27,000 for expenses incurred by Mr. Harmon's clients. See transcript of court proceeding of December 19, 1996.

* Mr. Hurley paid these amounts on January 22, 1997 (see check for $2,775 and check for $27,004). Mr. Harmon cashed the checks on January 24, 1997 (see bank stamp on backs of checks here and here).

* Several days later Mr. Harmon called to say Mr. Hurley had overpaid what he owed, citing a "mistake." Mr. Harmon gave no details about the nature of the "mistake," nor how it occurred. On March 5, 1997, Mr. Harmon wrote Mr. Hurley a check for $21,879.46.

More Strange Twists

* During discovery in one court action, Mr. Hurley found out that Larry Pratt, executive director of Gun Owners of America, paid $2,000 to help finance the litigation costs of the take-over operation. Mr. Pratt's check was drawn on the account of an organization called the Committee to Protect the Family Foundation, another 501(c)(3) operation. When contacted by this writer, Mr. Pratt confirmed that he was associated with the Committee to Protect the Family, but said that he had no recollection of having written such a check. The Committee to Protect the Family has been inactive for some years, he said.

* A group called The Counsellors figures in the take-over dispute. According to Mr. Hurley's testimony before the Senate in 1994, The Counsellors is a private and secretive club of judges and lawyers; its apparent function is to provide an inside track to the judiciary on so-called national security matters. Take-over lawyer Harmon (who also happens to be general counsel of the Reserve Officers Association) runs The Counsellors. Membership in The Counsellors is thought to be at least one hundred persons. Judge Bayly is included in that membership.

* Also a member of The Counsellors is federal judge Richard Urbina, who figures large in the Confederate Memorial Association dispute. In one of the legal cases surrounding the take-over attempt, Judge Urbina validated a "court order" directing the CMA to install the North operatives on the CMA board of directors. The "order" did not result from any court hearing; it was unsigned, and mysteriously appeared in the court jacket. Judge Urbina was appointed to the federal bench after his action, despite Hurleyâs 1994 testimony to the Senate.

The Counsellors is listed under the heading of ãPrivate Clubsä in The Capital Source, 1994. The Capitol Source is published by National Journal.