E&E Legal Letters Issue IV: Bootleggers and Baptists . . . and Hucksterism

/, Green Groups, Schnare, War on Coal/E&E Legal Letters Issue IV: Bootleggers and Baptists . . . and Hucksterism

by David W. Schnare
E&E Legal General Counsel

Thirty-one years ago, Bruce Yandel coined the phrase “Bootleggers and Baptists” to describe how these strange bedfellows work together to corrupt the economy and the law. “Baptists” point to the moral high ground and give vital and vocal endorsement of laudable public benefits. Bootleggers are simply in it for the money. Today, Yandel’s theory is in full bloom and there is no more prominent “baptist” than the Sierra Club and no more prominent bootleggers than anti-coal (renewable energy) businesses.

But, these bootleggers and baptists have taken a step too far. Despite their claims of moral superiority, the Sierra Club has become a huckster for the bootleggers and the Sierra Club Foundation has been infiltrated and controlled by the bootleggers themselves. In so doing, they have broken the law.

E&E Legal has attached a report to its formal Internal Revenue Service referral alleging the Sierra Club and the Sierra Club Foundation are in potential noncompliance with the tax law. Such referrals are not unusual. The IRS receives complaints from the general public, members of Congress, federal and state government agencies, and internal sources every year and has established an office tasked exclusively to review these referrals.

The E&E Legal referral, however, is different from recent high-profile complaints to the IRS. For example, liberal watchdog groups have complained to the IRS that the conservative group Crossroads GPS violated the law by spending heavily on campaigns. The E&E Legal complaint is not about politics and political spending. We alert the IRS to two Sierra Club and Foundation practices that appear to violate the law on impermissible benefit to private interests and failure to pay taxes on unrelated business income.

The Sierra Club commits its most blatant violation by sending its members into communities to sell the products of a selected local solar panel company. They have done this in both Maryland and Utah and do it for one reason, money. As the Sierra Club’s Chief of Staff Jesse Simons has stated, “This has been a great revenue-generating tool for the Sierra Club.” The Sierra Club makes a $750 profit from every sale in Maryland and has never paid taxes on that commercial enterprise. The Sierra Club markets the products of a single company in each jurisdiction, in direct competition to several other similar companies who cannot rely on the Sierra Club sales force. This violates the law.

A more perfidious problem is the Sierra Club’s, and its money-raising Foundation’s use of its “War on Coal” to not only produce profits, but to conspire with the companies that profit from that war. Eight of the Sierra Club Foundation’s 18 directors own or operate organizations that directly benefit from the War on Coal. These directors are the captains of the renewable energy industry. While these directors aren’t paid by the Sierra Club Foundation, their companies directly profit from the Sierra Club Foundation’s primary “program,” the War on Coal. Beyond the illegal inurement to these directors’ interests is the direct benefit to major donors. Natural gas producer Chesapeake Energy paid $26 million to the Sierra Club for the express purpose of forcing coal-fired electricity companies to switch to natural gas. This was small potatoes compared to David Gelbaum who, alone, donated more than $100 million to the Club. Gelbaum controls more than 40 “clean tech” companies who directly benefit from forced shutdown of the coal-power industry. The Sierra Club Foundation wages a war on coal to line the pockets of its directors and top donors. This, too, is not lawful.

In its legal analysis of these “bootlegger” and “huckster” activities, E&E Legal suggests that both the Sierra Club and the Sierra Club Foundation have violated the tax laws and regulations, and brings these matters to the IRS for careful review and investigation.

2016-12-11T17:07:57+00:00 September 17th, 2014|E&E Legal Letters, Green Groups, Schnare, War on Coal|