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May 11, 2010

Investigative Report: Richard Berman

Corporate front-man makes a fine living attacking charities

  • LIVING LARGE—The McLean, Va., mansion that is home to Richard Berman, who has established a web of organizations to attack public interest charities and groups on behalf of hidden corporate clients and their agendas. The HSUS

  • LIVING LARGE—The McLean, Va., mansion that is home to Richard Berman, who has established a web of organizations to attack public interest charities and groups on behalf of hidden corporate clients and their agendas. The HSUS

  • LIVING LARGE—The McLean, Va., mansion that is home to Richard Berman, who has established a web of organizations to attack public interest charities and groups on behalf of hidden corporate clients and their agendas. The HSUS

  • LIVING LARGE—The McLean, Va., mansion that is home to Richard Berman, who has established a web of organizations to attack public interest charities and groups on behalf of hidden corporate clients and their agendas. The HSUS

Editor's note: Millionaire PR operative and lobbyist Richard Berman and his shadowy web of corporate-front organizations rake in large sums of money in attacking public interest groups, including The Humane Society of the United States. (Read a letter from the National Federation of Humane Societies to Mr. Berman.)

The HSUS hired independent journalist Ian T. Shearn to write an investigative report about Berman and the workings of his groups. Shearn, as statehouse Bureau Chief of the Newark Star-Ledger, led a team of reporters that won a 2005 Pulitzer Prize for the newspaper in recognition of its coverage of the resignation of then-Gov. James McGreevey.

Shearn’s distinguished career spanned 29 years as reporter and editor. He is now a freelance writer based in Hillsborough, N.J.

Shearn’s contract required him to identify himself in all encounters as preparing a report for The HSUS. The final product, however, represents his independent reporting and judgment.

This is page 1 of 4.

 


 

Author’s note: In a public statement on Monday May 17, a spokesman for Richard Berman noted an error in the above story, regarding a change in the composition of the board of directors at the Center for Consumer Freedom in 2007. That error has now been corrected.

As originally written, the story contained the following paragraph:

It is unclear whether the IRS acted upon Sloan’s complaint, as the federal agency never discloses its investigations, but Berman’s tax returns suggest the agency has shown some interest. In CCF’s 2006 tax return, legal fees spiked to $130,000, about 10 times the amount of previous years. In 2007, the charity’s returns showed an abrupt upheaval in its board of directors. Berman, the executive director, was the only survivor.

The last two sentences have been replaced with the following:

In 2007, the charity’s returns showed two of CCF’s five board members—one a Berman and Co. employee, and the other a board member on another one of Berman’s public charities—had been replaced. In the IRS complaint, Sloan had specifically challenged the two directors’ ability to exercise independent judgment because of their conflicting roles with Berman.


If charity does indeed begin at home, in the case of Richard Berman, it starts in a $3 million, 8,800-square-foot mansion he shares with his second wife in McLean, Va. One of his first decisions in a day of many is whether to drive the Bentley or the Ferrari to work. On this particular spring morning, he goes with the Bentley.

Capable of zero to 60 in 4.4 seconds, the commute to his Washington D.C. office is no doubt enjoyable, even if the car’s 500-plus horsepower is bridled in congestion. He glides into his parking garage in the K Street corridor, gently backs the Bentley into a reserved spot and exits the car, clutching a bundle of newspapers under his arm. 

He walks with a quick, determined gait to the elevator that takes him to his office, Berman and Co., a public relations/lobbying firm that consumes the entire eighth floor.  According to one visitor, the bustling office has all the appearances of a political boiler-room operation, a roomful of 25 to 30 young adults fervently attending to their computers and phones.  The walls are covered with ornate, mill-worked wood, and there is a constant stream of visitors.

But this is no ordinary PR operation. This is where white-knuckle lobbying and media buys merge with a handful of public charities Berman has created to spin and cajole public perception on a variety of issues. But for the most part, he attacks and intimidates those with contrary views, and under the banner of the public good serves the agendas of corporate America.


VIDEO: Berman drives away in his Bentley.


His targets are mostly activist charities that criticize or have conflicting views with big business. Organizations like The Humane Society of the United States, the Centers for Disease Control and Prevention, Mothers Against Drunk Driving, the Center for Science in the Public Interest. He also takes direct aim against labor unions and any politician who lines up on their side.  His strategy: Shoot the messenger.

When it comes to debate over such issues as animal welfare, blood-alcohol levels, minimum wage, union organizing, trans fats, sugar or mercury in fish, Berman is on the attack.  And his advocacy is always in step with his client list. 

His Rolodex contains a far-reaching array of big-business interests in the tobacco, alcohol, restaurant and food industries. His political alliances run the gamut, from Newt Gingrich to George McGovern. But his political contributions show he prefers Republicans. His aggressive, shrill media campaigns have earned him the nickname—Dr. Evil.  It’s a moniker he cherishes.  Berman loves a fistfight, and will gladly cross the street to engage. 

...for the most part, he attacks and intimidates those with contrary views, and under the banner of the public good serves the agendas of corporate America.

“Richard Berman is a professional antagonist, trying to discredit people who are doing good in the world,” said Wayne Pacelle, President and CEO of The Humane Society of the United States “He does not seek sensible discourse; he simply sees HSUS as a pathway for enrichment ... This guy has developed a cottage industry attacking public interest organizations.”

Advocacy is Washington D.C.’s biggest business. And in a city crammed with PR/lobbying firms, charities and think tanks, Berman has emerged as one of its most controversial players, essentially because of the business model he has adopted and refined. It is commonplace for lawyers, lobbyists and PR types to labor on behalf of their clients’ bottom line, but real money, Berman has discovered, can come from charity.

It works like this:

Berman identifies issues that threaten the profit margins of the food and beverage industries—many of them clients—and establishes a tax-exempt public charity to raise money. In most cases, he appoints himself as executive director and appoints a board, often with ties to the food and beverage industries.  The charity established, he raises millions of dollars each year and then hires himself and his for-profit PR firm to do research, run ad campaigns and start websites.  His annual management fees run in the millions.

For example: Berman created a 501(c)(3) charity, the Center for Consumer Freedom (CCF) in 2002 to “educate the public on food and beverage issues.”  Berman generated more than $20 million in contributions to CCF through 2008 (he has yet to file his 2009 tax documents). Nearly half of that—more than $9 million—was paid to Berman and Co., of which Berman is the president and sole owner, or to Berman directly, in management fees and expenses, according to an analysis of his IRS tax returns.

 

In 2008, his charity reported $1.5 million in revenue, mostly from donations; Berman and Co. and Berman were paid nearly $1.4 million.

And that is just one of his charities. Berman and his company received at least an additional $17 million in management fees and compensation since 1997, according to a review of tax returns for three of his other charities. In short, the Berman public charity/private sector business model, which he controls from both ends, has made him a wealthy man.

Berman declined to be interviewed for this story, but during an interview with MSNBC’s Rachel Maddow in February, he offered this about the many websites he has created to push his message:

“I start a lot of these myself because I believe in them. Then I go to people and I say, ‘Listen, this is what I’m doing, and if your beliefs are consistent with mine, will you help me get this thing out?’ … I don’t say things I don’t believe.”

And when asked who those people are who decide to donate to his charities, Berman simply says, it’s none of your business.  MSNBC’s Maddow tried. CBS’ Morley Safer tried. But Berman is right: Public charities do not have to disclose the identities of their donors, and virtually none of them do.

Genesis

But a growing suspicion, inside Washington and beyond, is that Berman is simply funneling millions from anonymous corporate donors and trade associations into his own pocket.  That is the underlying premise in a November 2004 IRS complaint filed by Melanie Sloan, the executive director of Citizens for Responsibility and Ethics in Washington.
 

» continue to page 2 of this investigative report 
» click through to pages 1, 2, 3, 4
» get a pdf of the full report

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