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State lawmakers' pet nonprofits raise red flags, warrant scrutiny

Traditionally, nonprofit organizations do good works and are broadly supported by the public. Lately, however, some nonprofits — those with close ties to elected officials — are under increased scrutiny.

Leave it to Pennsylvania lawmakers to give nonprofits a bad name.

With prominent examples in Western Pennsylvania and Philadelphia, there is a troubling pattern emerging. State lawmakers with close ties to a nonprofit often gain financial or political benefits from those nonprofits, which they help fund with state grants. A combination of state and federal investigations might expose the extent to which these nonprofits have been used, or abused, by elected officials.

In Western Pennsylvania, state Attorney General Tom Corbett has been investigating the Beaver Initiative for Growth (BIG) as part of a broader probe into corruption involving extraordinary year-end bonuses for legislative staffers. That probe already has produced convictions over former state Rep. Frank LaGrotta's hiring of relatives as "ghost" employees, who did little or no work for their state paychecks.

Despite having a benign name like Beaver Initiative for Growth, there are many questions being asked about BIG. It was the pet nonprofit of former Democratic state Rep. Mike Veon, who was defeated in the 2006 elections, and state Sen. Gerald LaValle, a Democrat from Beaver.

Veon and LaValle helped direct more than $10 million in state grants to BIG, but there is little evidence of what that money accomplished.

BIG paid generous salaries to aides and associates of Veon and LaValle. It also is known that it helped fund another nonprofit, Voluntary Action Center, which happened to employ LaValle's wife. The Beaver County Times reported that "Darla LaValle was paid $122,343 in 2006 — more than one-third of the nonprofit's revenues."The group promoted volunteerism and provided Christmas gifts to children.

The newspaper reported last week that the senator's wife repaid $47,323 as "excess benefit," according to the group's 2006 IRStax filing.

The bulk of the state grants, however, went to BIG, where Veon and LaValle were for years the group's only board members. After Veon's election defeat, and coincidental with the Corbett investigation, BIG is shutting down.

While it operated, more than 50 percent of BIG's money went to salaries, equipment, consultants and public relations. Some of the consulting money went to a firm that hired Veon's brother. And the same consulting firm, which donated $6,000 to Veon's re-election efforts, was awarded a $450,000 contract by the House Democratic Caucus, when Veon was the number-two ranking Democrat in the House.

At the other end of the state, another nonprofit with a feel-good name, Citizens Alliance for Better Neighborhoods, is at the center of a federal indictment against state Sen. Vince Fumo, D-Philadelphia. The 139-count indictment charges Fumo with misusing $1 million in taxpayer funds for his personal and political benefit. It also charges that he misused about $1 million worth of assets of Citizens Alliance, which was founded by former Fumo aides and headed by a former Fumo staffer.

The federal investigation that led to the charges against Fumo began after PECO Energy Co. of Philadelphia donated $17 million to Citizens Alliance at about the same time that Fumo was integral in determining how the state would move forward with electric deregulation. The generous contribution was coincidental with Fumo's position changing to align with that of the electric utility.

The ongoing investigation by Corbett should expand to look at all nonprofits with ties to lawmakers. The secretive process of allocating grant money through the state Department of Community and Economic Development is largely controlled by party leaders in Harrisburg, who divvy up millions of dollars for DCED grants behind closed doors.

A 2006 report by a Pittsburgh newspaper that six state lawmakers directed nearly $29 million in taxpayer money to their pet nonprofits should have sent up red flags. Corbett's investigation, which began with a focus on legislative bonuses apparently tied to political work, also has begun gathering evidence about these nonprofits showered with money by powerful state lawmakers. As part of the investigation, independent audits should be conducted to determine how the money was spent — and who benefited.

While the nonprofits swept up into the attorney general's investigation might well have done some good work for the public, they also clearly served to benefit their Harrisburg sponsors — politically or financially.

What appears to be abuse of nonprofits by leading state lawmakers will be made more clear as Corbett's investigation continues and as Fumo's federal trial begins sometime next year. For now, these lawmakers have revealed more evidence of self-serving lawmakers playing fast and loose with taxpayer dollars.

Any nonprofit organization with close ties to a state or federal lawmaker now has to be looked at with suspicion — and should be required to produce an independent audit of its spending.

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