Fulani Party Raises Funds Creatively

By George E. Jordan

NY Newsday, April 6, 1992

The 1992 presidential campaign of New Alliance Party candidate Lenora Fulani has already funneled $472,000—half of it in federal matching funds—to eight businesses tied to the New Alliance Party, campaign filings show.

Fulani's campaign outlays for lawyers, advertising, printing and other services help fuel a $3.5 million a year network of businesses affiliated with the New York based party, according to an investigation by New York Newsday.

There is nothing improper about candidates directing campaign funds to businesses run by members of their own political party. But the New Alliance Party, which is controlled by a handful of members loyal to party founder Fred Newman, has devised a sophisticated system for drawing down federal election funds and using them to support a web of companies that service other parts of the organization.

Fulani's 1992 campaign, which has so far received $1,033,000 in federal matching funds—more federal money than Jerry Brown has pulled down—also relies on an aggressive national fundraising effort conducted by party members, many of whom are patients at psychotherapy clinics run by New Alliance Party members.

These campaign workers make an unusually large number of contributions back to the campaign, federal election records show. Those contributions, in turn, enable the party to collect more matching funds.

At the center of the party's financial self-dealing are Fulani's presidential campaigns. Her 1992 campaign so far has raised $2.2 million, nearly half of that in matching funds. Her 1988 campaign raised $2.6 million overall and $922,000 in matching funds. To qualify for matching funds—which come from the voluntary check off on personal income tax returns—a campaign has to receive at least $5,000 in individual contributions in at least 20 states. Third-party candidates rarely qualify for matching funds, which the government pays dollar-for-dollar for each contribution up to $250.

Fulani was able to muster only 402 votes in the February 18th New Hampshire Democratic primary, despite spending $142,162 to campaign in that state, according to Federal Election Commission reports. She dropped out of subsequent primaries, she said, to avoid risking the loss of future matching funds, which are pegged to a threshold vote in party primaries. By doing so, she can continue to qualify for federal funding as a third-party candidate in the general election.

Fulani's 1992 campaign committees have directed a quarter of their $2.2 million in expenditures since January, 1991, to eight businesses owned and operated by New Alliance Party members. Among those businesses are Castillo Communications, which has received $121,867 for public relations work; the People's Law Institute, which has received $139,545 for legal services; and Ilene Advertising, which has received $100,828 for advertising work.

It could not be determined from the public record the operating expenses of the various service providers.

A New York Newsday review of FEC filings also shows that about a dozen of Fulani's salaried staff members and two dozen volunteer fundraisers have made periodic campaign contributions ranging from $100 to $250.

Madelyn Chapman, a spokeswoman for the New Alliance Party and a partner in Castillo Communications, said the campaign spending and staff contributions are not improper because “our people are ideologically committed.”

FEC spokesman Scott Moxley said that “as long as the expenditures are for actual services that are reasonable and customary,” it is not improper for a political campaign to contract for services from companies owned by close associates of the candidate. He added that the FEC conducts an extensive audit of contributions to campaigns that receive matching funds after the election.

Another important cog in the party's operation is the nonprofit Community Literacy Research Project, which owns a 9,000 square foot condominium loft at 500 Greenwich St., in TriBeCa, and operates a theater and an art gallery and stages teen talent shows.

The literacy project occupies one side of the loft, while the other side houses the East Side Center for Short Term Psychotherapy and four other businesses tied to the party—including a book publisher and Castillo Communications—that Dun & Bradstreet reported had combined sales last year of at least $2 million.

Fulani said her campaign and the New Alliance Party are financially separate from the literacy project and other profit-making ventures run by New Alliance Party members.

But money raised by the literacy project enabled it to leverage $2 million in 1989, according to its estimates, to purchase and renovate the lower Manhattan loft. Various party related businesses, including a publishing company and the public relations firm, rent space.

The biggest patron of the literacy project was Anita Penzer, 71, of Atlantic Beach, [Long Island], who gave $524,000 between 1986 and 1990. Penzer, the widow of a wealthy real estate investor, now says she was persuaded to make the donation by her daughter Judy, an artist who is active in New Alliance causes. “I really regret it,” Anita Penzer said in a telephone interview from Florida.

Judy Penzer did not respond to several messages left for her.

Another component of the New Alliance financial empire is the Washington-based Rainbow Lobby, a nonprofit corporation that raised $1.5 million in donations last year, making it one of the largest lobbies in Washington. Most of the money was raised from $35-a-person membership dues, telemarketing and door-to-door solicitations. The group's telemarketing operation is run out of an office at 250 West 57th Street in Manhattan.

Among those are the People's Law Institute, Ilene Advertising, the party newspaper, Fred Newman Productions Inc. (which runs the Budweiser Musicruise) and Raw Talent, the Rev. Al Sharpton's promotion company. Sharpton said he has a one-year, $12,000 contract with All Star Talent Show Network to sign entertainers.