Mystery Money

A new Meese puzzle

Yet another cloud has appeared over the troubled nomination of Presidential Counsellor Edwin Meese as U.S. Attorney General: a tax-exempt Reagan Administration transition fund, headed by Meese in 1980-81, that refuses to reveal where its private donations came from and where much of its money went. The New York Times reported last week that the fund has even refused to open its books to a federal audit. The disclosure led Senate Judiciary Committee Member Ted Kennedy to ask Jacob Stein, the special prosecutor looking into allegations raised against Meese, to include the fund in his probe. A source close to the investigation insisted that Stein, with his far-ranging mandate to sort out the tangled Meese affair, will almost surely decide to look into the matter.

Meese served as president and the only salaried director of the Presidential Transition Foundation Inc., set up to plan the transfer of executive power from the Carter Administration to Reagan's team. The other directors were William Casey, now CIA director, and Verne Orr, now Secretary of the Air Force. In addition to receiving $2 million in operating expenses from the Government and $250,000 from the President's campaign treasury, the foundation raised $688,931 from unidentified private donors, according to its tax return. No limit was set on the amount people could donate, but Orr said at the time that single contributions were being limited to a maximum of $5,000. The foundation also promised that its books would eventually be made public.

That never happened. The fund declined a request by the General Accounting Office (GAO) in 1981 to provide an accounting of privately raised receipts and their disbursement. A similar request to the White House in 1981 produced a vague promise that it was "attempting to formulate a response," according to the GAO. Even though the foundation has claimed tax exemption, the Internal Revenue Service has never approved that status. Noting that the IRS is headed by a presidential appointee, Kennedy asked, "Why has it not audited the foundation?" If the transition fund is not tax exempt, the donors of the $688,931 could not claim tax deductions.

Meese's attorney, E. Robert Wallach, said that "explicitly, Meese didn't handle fund raising, he didn't handle disbursements." Another member of his legal team, Leonard Garment, promised that if Prosecutor Stein decides to probe Meese's role at the foundation, "we are prepared to answer all of his questions."