03/10/2011 06:22 pm ET | Updated May 25, 2011

Second O'Keefe-NPR Video Released, Alleging That NPR Agreed To Shield Donation From Scrutiny [UPDATE]

A second video from James O'Keefe's Project Veritas has been made available online, extending the story of the Ron Schiller video "sting" that ended in the dismissal of both Ron Schiller and NPR CEO Vivian Schiller (no relation) earlier this week. Today's offering is not video footage; rather, it's the documentation of several phone calls between a man posing as a spokesman for a nonexistent organization set up to appear to be underwritten by the Muslim Brotherhood, and Betsy Liley, NPR's senior director for institutional giving.

The essentials are these: "Ibrahim Kassam" of the "Muslim Education Action Center" contacts Liley as a follow-up to the conversation you've already seen in the first video -- the one where Ron Schiller says mean things about the Tea Party. Their conversations center on anonymous donations, what level of transparency is expected of NPR as an organization partially funded by taxpayers and whether or not NPR can shield the nonexistent organization from a government audit.

Liley explains that the government is entitled to both audit NPR's programs and examine their financial statements. She goes on to state that an anonymous donation was an option: "If you are concerned in any way about that, that's one reason you might want to be an anonymous donor," he says. "And, we would certainly, if that was your interest, want to shield you from that."

Institutional donations are often given anonymously, and Liley cites several precedents while on the phone -- including one multimillion-dollar donation for which "there was no paperwork in any official place that identified him as that donor." Asked if NPR specifically accepted regular donations on an anonymous basis, Liley answers in the affirmative. She goes on to say, "There are a number of people who choose to make gifts through us because, you know, they don't want their identities known and they like to remain private. And we do accommodate their desires regarding anonymity."

Asked if NPR can actually shield the organization from a government audit, Liley professes uncertainty and a promise to inquire. Liley appears to have followed up in a March 1 email with the following:

Anonymous donation: NPR can list MEAC as an anonymous donor in our database, which would mean we would not disclose the organization's name. We do not publish a list of gifts, so it would not be an issue there.

Audit: The audits of our government grants are conducted by the same audit firm we hire to do our NPR financial audit.

I am awaiting a draft agreement from out legal counsel and will share it when I have it.

NPR has repeatedly said that they had no intention of accepting money from this pretend organization. On the occasion of the disclosure of the first video, NPR spokeswoman Dana Davis Rehm stated, "The fraudulent organization represented in this video repeatedly pressed us to accept a $5 million check, with no strings attached, which we repeatedly refused to accept."

Liley's conversations clearly don't jibe with anyone's idea of a "repeated refusal." Behind the scenes, however, things may have been different. Vivian Schiller, for her part, says that NPR's vetting of the organization raised the necessary red flags: "Their address was a UPS store with a post office box. We couldn't find any records of their 501-3 status. We could not find any records of their tax-exempt status. We could find none of their 990 reports."

The question now becomes whether Liley is guilty of something for which she deserves to be fired, or whether she was merely trying to keep a top-dollar donor on the hook while NPR's legal counsel performed their due diligence in vetting MEAC, the results of which were the revelation of ample reason to refuse the donation. If history is any guide, the powers that be at NPR will probably panic and make a hasty decision that won't end up changing the minds of any of the people who want to defund them, anyway.

By the way, here's a pro tip: when an organization one day makes "repeated requests to be photographed delivering a check," and the next day is asking all kinds of questions about how they can keep their donation and their identity from becoming public, you are probably being scammed.


Key takeaways: Vivian Schiller, in an email to Liley, Joyce Slocum (NPR General Counsel), and Debra Delman, says that -- contra Liley -- the donation "would need to be reported to the IRS, including the name of the donating institution." So much for that promise of total confidentiality. In Slocum's email to "Kasaam," she asks for "publicly accessible information" that's necessary to accept a donation:

The Muslim Education Action Center does not appear in IRS Publication 78, which lists all organizations which have received a 501(c)(3) determination letter from the IRS, and whose status as a tax exempt organization has not been suspended or revoked. (Only churches are exempt from the requirement of obtaining an IRS determination letter, though even many churches voluntarily do so.) Since the Muslim Education Action Center does not appear in Publication 78, we need to ask for a copy of the IRS determination letter as to its 501(c)(3) status.

Also, most tax exempt organizations are required to file an annual form 990 in order to maintain their tax exempt status. Failure to file for three consecutive years results in an automatic revocation of tax exempt status. Again, because such organizations are required to make their three most recently filed annual 990 returns and all related supporting documents available for public inspection, we are usually able to obtain copies of these from the organization's own website, or if not there, from GuideStar or the Foundation Center. We have been unable to locate the 990's for the Muslim Education Action Center through any of these sources, so need to ask that you also provide those for our review.

As MEAC is a fake organization, none of that documentation could have been provided. In response, the organization balked at providing some of the necessary material and put off providing the rest:

On the other hand, information such as a list of our contributors is not possible I'm afraid - much the way NPR does not disclose its donors. If the interest in that information is a desire to solicit from our donors, I can assure you that we are already doing our best to raise funds on your behalf, and fund-raising on this issue has been quite fruitful for us given the ever rising specter of Islamophobia in America. I am also quite confident it will only become easier.

Based upon my experience and the confirmations of our legal counsel, none of this information is legally necessary from either an individual donor or an institution, but we will be happy to oblige on issues like tax status and 990's nonetheless.

As it turns out, Liley was placed on administrative leave the same day Ron Schiller was. Here's the statement from NPR spokeswoman Dana Davis Rehm:

The statement made by Betsy Liley in the audiotapes released today regarding the possibility of making an anonymous gift that would remain invisible to tax authorities is factually inaccurate and not reflective of NPR's gift practices.

All donations -- anonymous and named -- are fully reported to the IRS. NPR complies with all financial, tax and disclosure regulations.

Through unequivocal words and actions, NPR has renounced and condemned the secretly recorded statements of Ron Schiller and Betsy Liley. Mr. Schiller is no longer with NPR and Ms. Liley has been placed on administrative leave, pending an investigation of the matter.

No stronger statement of disavowal and disapproval is possible. NPR will not be deterred from its news mission and will ultimately be judged by the millions and millions of listeners and readers who have come to rely on us every day.

Again, it appears that Liley played fast and loose with her salesmanship with an eye toward keeping a potential high-dollar donor close to a commitment. She shouldn't have suggested that level of confidentiality was available to any donor. That said, NPR's counsel were clearly of a different mind on the matter.

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