Newsreal: Paula Jones' mysterious benefactor

Salon uncovers a secret $50,000 donation to Paula Jones from a mysterious Washington nonprofit organizition

By Jonathan Broder - Murray Waas

Published March 12, 1998 8:00PM (EST)

WASHINGTON -- An obscure nonprofit organization headed by a Washington tax lawyer and conservative political activist made a secret $50,000 contribution to the legal fund of Paula Corbin Jones to assist her in her sexual misconduct suit against President Clinton, Salon has learned.

The Sept. 14, 1995, contribution to Jones' legal war chest came from the Washington, D.C.-based Fund for a Living American Government, or FLAG, according to sources who have reviewed financial records detailing the donation.

The executive director of FLAG, Washington tax attorney William Lehrfeld, refused to confirm or deny that his organization made the contribution to Jones' legal fund. "I think that individuals and organizations should be able to support Ms. Jones with their privacy being assured," he told Salon.

It is unclear who provided the money that was then contributed by FLAG to Jones' legal fund. At first, Lehrfeld suggested that he had used FLAG as a vehicle to make his own personal contributions. "It's not a group. It's me. It's only one person," Lehrfeld said, adding he runs the organization single-handedly from his Washington law office. "I use the fund to provide gifts to the causes and organizations that I back. It's my way to finance gifts and thank some of my clients."

FLAG maintains an extremely low profile. It is not listed in the Washington, D.C., telephone book, and directory assistance has no listing for it either.

As a tax-exempt nonprofit organization, however, FLAG is required by law to allow public review of the group's financial disclosure statements. Lehrfeld reluctantly showed Salon a disclosure statement for 1995, the year that the organization secretly contributed $50,000 to Jones' legal fund, but there was no mention of the donation. FLAG's disclosure statement said only that the organization had paid out a total of $175,000 that year "in support of human and civil rights, secured by law via payments to lawyers and law firms." The disclosure statement said FLAG's primary goals were "to assist the Heritage Foundation" -- a Washington-based conservative think tank -- and also to promote the "ideals of limited government."

Before showing Salon the disclosure statement, however, Lehrfeld said he needed time to "delete from the record" the names of individual contributors to the organization to protect their privacy. Lehrfeld cited laws that permitted him to shield the contributors' identities.

When a reporter reminded Lehrfeld that he had identified himself as the only contributor to FLAG, the attorney responded, "Well, it is me and other people. It is me, but it is other people, too."

Lehrfeld has built a career out of doing tax-related legal work for a number of conservative foundations and political organizations, including the Sarah Scaife Foundation -- controlled by Pittsburgh newspaper publisher Richard Mellon Scaife, an heir to the Mellon banking fortune and a fierce critic of President Clinton -- the Heritage Foundation and the Washington Legal Foundation. In 1996, Lehrfeld also represented a tax-exempt group that raised funds to finance an all-Republican study commission appointed by House Speaker Newt Gingrich and then-Senate GOP leader and presidential candidate Bob Dole.

Earlier this week, when a U.S. District judge upheld an IRS decision to deny the group tax-exempt status because of its ties to Republican lawmakers, Lehrfeld said the judge had confused the commission's positions on social change with political partisanship, which its tax-exempt status prohibits. "We may be in a situation where organizations are going to have to be more circumspect in the way they advocate their views," he told Roll Call, a Washington weekly.

The secrecy surrounding FLAG's $50,000 donation to Paula Jones raises questions about the identities of the people or groups that are contributing to Jones' legal fund and whether they may be using middlemen to funnel money tax-free to Clinton's accuser. The organization's 501(c)3 tax-exempt status allows contributors to make donations tax-free.

During Salon's review of FLAG's 1995 disclosure statement at his office, Lehrfeld appeared agitated that his organization was being scrutinized. The attorney warned that he knew details of the Salon reporter's personal life. "I think I've seen a name like yours in an FBI file," he said. Asked how he obtained an FBI report, Lehrfeld suggested he had gotten it by filing a Freedom of Information request.

The disclosure of FLAG's secret $50,000 donation comes at a time of growing controversy surrounding the Paula Jones Legal Fund. The Rutherford Institute, the conservative legal foundation that took responsibility for paying Jones' legal bills late last year, has contacted Jones' legal fund to express concerns that it has not passed on any money to the Rutherford Institute, a spokesman for the foundation told Salon.

The Rutherford Institute contacted Jones' legal fund after the Chicago Tribune recently reported that money raised from the public to help pay her legal expenses is going to a private account under Jones' control and a direct-mail company with ties to conservative causes, but not to her lawyers. Jones took over the fund last November, according to the fund's financial records. Jones is now being represented by Dallas attorney Donovan Campbell.

Jones' previous lawyers have said they also have received no money for their services since they left the case last September. The September 1995 donation from FLAG was made when they were representing Jones. One of Jones' former lawyers, Joseph Cammerata, declined to discuss anything about contributors to Jones' legal fund.

Jonathan Broder

Jonathan Broder is Salon's Washington correspondent.

MORE FROM Jonathan Broder

Murray Waas

Murray Waas is a frequent contributor to Salon.

MORE FROM Murray Waas

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