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For
Jesse, It's Still All About the
Money
Posted Jan. 23,
2003
By Kenneth R.
Timmerman
(Feb. 4-17, 2003 issue)
By
Kenneth R. Timmerman
It's one thing for the Rev. Jesse Jackson
to shake down Wall Street when he finds
corporate officers weak or foolish enough
to give in to his race-baiting tactics.
It's quite another for the Bush
administration to aid and abet Jackson's
self-serving schemes. That's what happened
a few weeks ago when Federal
Communications Commission (FCC) Chairman
Michael Powell, a Bush appointee and son
of Secretary of State Colin Powell, flew
to New York City to embrace Jackson during
his sixth annual Wall Street Project
conference.
[Read the sidebar that accompanies
this article, "Thou
Shalt Not Speak Ill of the Rev.
Jackson."]
Michael Powell and Securities and Exchange
Commission (SEC) Commissioner Roel Campos
spoke at an awards luncheon on Jan. 16,
introducing New York Stock Exchange
Chairman Richard Grasso. The two Bush
appointees offered markedly different
versions of why they appeared at a
fund-raising event for Jackson.
In a telephone interview shortly before
his New York speech, Campos told Insight
that he viewed his participation as a
"duty, not an endorsement" of Jackson's
organization and his methods. "I make no
judgment as to whether it's a shakedown,"
Campos said. "The SEC is an independent
agency that represents the interests of
all investors. I don't ask if they are
Democrat or Republican or how they voted.
I ask: 'Are you interested in the SEC?'
It's our duty to get the message out that
we are intent on guaranteeing the
integrity of the marketplace so people can
have faith in the market."
Powell spokesman David Fiske also denied
that his boss' appearance at Jackson's
premier fund-raising event constituted an
endorsement. "He's going to promote
minority participation and the health of
the telecommunications industry, which has
become a major concern since the WorldCom
meltdown. Whether this 'legitimizes' Jesse
Jackson was never an issue."
On the contrary, says Harold Doley, who in
1973 became the first black businessman to
purchase a seat on the New York Stock
Exchange. "By trotting Michael Powell
around in front of photographers, Jackson
is giving the perception that he
consistently can deliver the FCC. That's
been a real moneymaker for his
cronies."
Jackson has raked in millions of dollars
by "brokering" deals for the
telecommunications industry. His method,
described in detail in this reporter's
book Shakedown: Exposing the Real Jesse
Jackson, was simple: When telecom or media
organizations went to the FCC at merger or
acquisition time for licenses, Jackson was
waiting. Using the 1996 Telecommunications
Act, which mandated minority set-asides,
Jackson's lawyers would file objections to
the deals with the FCC. Jackson then would
contact corporate chief executives and
offer to "mediate," often winding up with
huge checks for his efforts. Whether the
"problem" he sought to "mediate" existed
before his lawyers created it at the FCC
is open to question, say critics.
In 1997, for instance, he opposed the sale
by Viacom of its radio network to
Chancellor Media Corp., arguing that the
sale violated a Viacom pledge made in 1994
to sell to minority owners two stations
serving the black community in the
Washington area. That objection
effectively blocked the deal.
Viacom Chairman Sumner Redstone, a major
donor to the Democratic National
Committee, hadn't foreseen any difficulty
in getting by the FCC. Eventually he met
with Jackson to discuss his price for
withdrawing the objections. It was a mere
$2 million, a small commission when cast
against a $1 billion deal. The FCC
trumpeted the arrangement as a
"settlement," leaving aside the thorny
question raised by Doley and other critics
of what right Jackson had to insert
himself in a commercial transaction
between outside parties.
Viacom and Chancellor Media paid the money
into a special account dedicated to
"public education and advocacy" and
special conferences "to educate the public
about the value of minority media
entrepreneurship" managed by longtime
Jackson allies Warner Session and former
New York City mayor David Dinkins. Session
then funneled $680,000 into Jackson's
Citizenship Education Fund (CEF). Redstone
paid Jackson a $40,000 cash fee to cover
legal costs and had Viacom contribute an
additional $422,500 to CEF, tax records
show. Not bad for a few days' work.
This is not Michael Powell's first effort
to "reach out" to Jackson. As FCC
chairman, he serves on the board of
directors of the Telecommunications
Development Fund (TDF), a private fund set
up by the FCC. For years the fund has been
capitalized under a bizarre arrangement,
crafted by the Congressional Black Caucus
as an amendment to the Telecommunications
Act of 1996, that allows the fund to spend
the interest on deposits paid to the FCC
by companies seeking to buy spectrum at
federal auction. TDF then "invests" in
start-up ventures. "Most of this money has
gone to Jesse Jackson cronies," former FCC
commissioner Harold Furchtgott-Roth tells
Insight.
Serious money is involved. In January
2001, Verizon, AT&T and others laid
out a $1.5 billion down payment to buy
spectrum belonging to Nextway after that
company went bankrupt. Interest on the
deposit amounted to $2 million per week,
Furchtgott-Roth says, and was
"distributed" by TDF with Michael Powell's
approval.
When the Nextway auction was declared
illegal, a D.C. circuit court ordered the
FCC to repay the deposit money. But as
much as $100 million in interest was lost.
"The interest stays with the fund. That's
the scam," says Furchtgott-Roth.
Run by former Commerce Department official
Ginger Lew, infamous for her role in the
Clinton Chinagate fund-raising scandals,
TDF counts Jackson crony Thomas A. Hart on
its board. Hart was one of the main
Washington lawyers used by Jackson in the
numerous FCC complaints his groups filed.
Some of the projects TDF has funded are
legitimate and have become profitable;
others took the money and disappeared.
Several sources believe that Michael
Powell is seeking Jackson's support for an
eventual bid for the U.S. Senate in
Virginia, and had been planning to run in
2002 until Sen. John Warner announced his
bid for re-election.
Doley believes that by courting Jackson
the Republican Party is wasting its time.
"We shouldn't be reaching out to our
enemies; we're not reaching out to Saddam
Hussein. My father used to say, 'You don't
feed frogs to snakes because the snake is
still going to bite you.' It's the same
with Jesse Jackson. He's never going to be
our friend."
In the wake of the embarrassment resulting
from Sen. Trent Lott's (R-Miss.) remarks
about Dixiecrat values, Republican
strategists are casting about for ways of
reaching out to the black community, a
traditional Republican constituency for
nearly 100 years after the War Between the
States. A group of conservative black
Republicans, led by commentator Armstrong
Williams, met with top Republican National
Committee officials in Washington on Jan.
13 to explore ways of wooing black
voters.
One tactic under discussion is to
emphasize the accomplishments of the Bush
administration. "Half of the federal
budget is now being managed by
African-Americans," says Doley. He pointed
out that the Bush White House has
appointed blacks to the No. 2 slots at the
departments of Housing and Urban
Development, Veterans' Affairs and Health
and Human Services, where they manage
hundred-billion-dollar budgets. Bush also
has appointed African-Americans to run the
General Services Administration, which
manages all federal property; the Office
of Personnel Management, which manages the
entire federal workforce; the National
Security Council and the departments of
State and Education.
Another option is to appeal to black
churches that are filled with social
conservatives who share much of the
Republican agenda. "It's a natural fit,"
Doley says. "Don't forget that the Voting
Rights Act was needed because Southern
Democrats were keeping blacks from
registering to vote. Blacks never had
problems with the Republican Party."
But why try to court African-Americans
through Jackson, who not only has
organized black churchmen for Democrats
but publicly has snubbed the Bush
appointees. Last October, after
entertainer Harry Belafonte called
Secretary of State Colin Powell a "house
slave," Jackson defended the calypso
singer and said that the secretary was
"not on our team," by which critics
presumed he meant "not a Democrat."
In previous years, Jackson's Wall Street
Project conference brought in close to $2
million. This year, with the help of
Michael Powell, he's been telling
reporters he hopes the take will reach $4
million, also thanks in part to help from
presidential hopeful Rep. Richard Gephardt
(D-Mo). "Dick Gephardt needs Jesse Jackson
to fend off a challenge from Al Sharpton,"
one Democratic Party insider tells
Insight. "Jesse Jackson is on the payroll
of the DNC [Democratic National
Committee]," says Doley. By pumping up
Jackson's coffers now, two years before
the 2004 election, the money becomes
harder to trace. During the final months
of the 2000 presidential race, Jackson
gave 150 speeches around the country on
behalf of the Al Gore-Joe Lieberman
ticket, prompting the American
Conservative Union to file a complaint
(still pending) with the Federal Election
Commission.
One of Jackson's sessions at this year's
conference was sponsored by the insurance
industry, eager to curry favor with him.
Speakers included senior executives from
North Carolina Mutual, Atlanta Life
General and the chief executive officer of
New York Life. Jackson announced last year
that he intended to go after the
successors of Civil War-era insurance
companies and back lawsuits seeking
reparations from companies that issued
policies to slave owners on their
slaves.
But Jackson himself now is facing lawsuits
that have been filed against him by black
entrepreneurs and associations in
California and Arizona. He also is in the
midst of an IRS audit, several sources
tell Insight, generated by complaints
filed after the 2000 election by the
American Conservative Union and the
National Legal and Policy Center.
Kenneth R. Timmerman is a senior writer
for Insight
magazine.
email
the
author
Sidebar: Thou
Shalt Not Speak Ill of the Rev.
Jackson
By Kenneth R. Timmerman
MGM executives thought they were doing
everything right. They had a black
producer, a black director, a black
screenwriter and an all-black cast for
their latest "ethnic" film, Barbershop.
[Read Kenneth R. Timmerman's
full-length article on the Rev. Jesse
Jackson, "For Jesse, It's Still All About
the Money," in the current issue.]
In the film, Cedric the Entertainer
plays an acid-tongued barber who takes
everyone to pieces. He mocks Martin Luther
King Jr. for his extramarital affairs and
says that Rosa Parks, the civil-rights
activist who refused to move to the back
of the bus, only did so because she was
tired. Says Cedric, "All she did was sit
on her a**." He also takes a swipe at the
Rev. Jesse Jackson. That, apparently, is
where he went over the line. Jackson is
known for many things, but a
self-deprecating sense of humor is not one
of them.
"Yes, comedies should illicit
[sic] laughs," he wrote in his
weekly Jacksfax in September 2001, "but
not at the expense of those whose legacy
is sacred."
Sacrilege having been committed,
Jackson and Al Sharpton then called MGM
executives Alex Yemenidjan and Chris
McGurk, to complain -- not in their own
name, to be sure, but in the name of the
National Association of Cosmetologists
(NAC) and other groups, saying they were
offended and planned to organize a
nationwide consumer boycott of the movie
if the offending comments weren't
stricken. Despite Jackson's threats, the
movie was the No. 1 box-office hit for its
first two weeks.
MGM called NAC President James Stern
and invited him for a private screening of
the movie. "I brought 100 of my members,"
he tells Insight. "We cracked up from
beginning to end. It was hilarious. If we
as blacks want equal rights, we have equal
rights to comedy, too. You can't just pick
and choose." The NAC declined Jackson's
attempts to convince them to boycott the
movie.
Stern sent out a printed poll to 14,000
of his members and says he received
replies from more than 11,000, who agreed
that they should ask for an apology from
Jackson and Sharpton for misrepresenting
them in their talks with MGM. Jackson
refused. That's when things got serious.
In late October, Stern and his
association filed a class-action lawsuit
against Jackson for $61 million. "Jackson
claimed falsely to represent our members,"
Stern says. In California, many black
hairstylists cater to a white clientele,
and Stern said that some of his members
had seen a 15 to 20 percent drop in their
business since Jackson's campaign against
MGM.
According to the complaint, Jackson
phoned Stern the day after the screening
and Stern requested that Jackson stop
claiming to represent the black barbers.
Stern also spoke with Sharpton. When Stern
refused Sharpton's demand that his
association support the boycott, "Sharpton
then yelled that he would continue to
claim that [the association]
supported his efforts because he had the
power to do so. He cursed at Stern and
hung up."
Greg Gorman of the Los Angeles law firm
Baute & Tidus joined the lawsuit
recently, scaling it back to $10 million.
"This is a lawsuit with a legitimate
basis," he tells Insight. "MGM has
confirmed the story."
Jackson's spokesman dismissed the flap
as "a nuisance suit" and has tried to
paint Stern as a gadfly with a criminal
record. "James Stern does have a criminal
record," Gorman says. "He wrote one bad
check and went to jail. But he is known
and respected as a community activist." In
the late 1980s Stern, who also is a
pastor, helped broker the first gangland
"truce" in Los Angeles between the Crips
and the Bloods. So much for the smear.
In Arizona, Jackson faces another
challenge from John W. Stone, a
businessman involved in a class-action
lawsuit against Albertson's, the
food-store chain. When Albertson's
attorneys fought back, Stone turned to
Jackson, who asked Stone to send all his
documents so Jackson's attorneys could
study the case. Then, "Jackson turned to
Albertson's and got a $50,000 grant," says
Ken Boehm, chairman of the National Legal
and Policy Center. "After that, he said
Albertson's was great."
And that's not all. Insight has learned
that Jackson has been putting pressure on
DaimlerChrylser to hire ad agencies from a
short-list of his friends, and in so doing
has aroused the ire of other black
executives who feel they have been cheated
out of their business. "Jesse Jackson is
trying to shake down Detroit through
threats of national boycotts against
automotive manufacturers," said Ernest
Walker, President and CEO of
VisionMediaTV. At the same time, Walker
said, he has learned from other black
advertising executives that Jackson and
Sharpton are "demanding hundreds of
thousands of dollars from black-owned ad
agencies. In other words, after they shake
down major corporations they broker the
advertising/marketing component to the
highest bidder among black firms. If the
firm refuses to pay them, they don't have
a chance to compete and are blocked
access."
Walker tells Insight he has written to
Attorney General John Ashcroft requesting
he open a criminal investigation under
RICO (Title 18, U.S. Code
§§1961-64). These are the tough
racketeering statutes used by federal
prosecutors in Chicago to bust the El Rukn
mob in the 1980s, which landed gang member
Noah Robinson -- Jackson's half-brother --
in jail with a life sentence.
-- KRT
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