A federal judge recently denied the opportunity for an open trial against liberal New York Attorney General Eric Schneiderman about his licensing scheme used to coerce nonprofit organizations to disclose their donors to him and his office.
Meanwhile, it is being reported that Schneiderman let the Clinton Foundation ignore New York law by failing to report millions of dollars in foreign government contributions.
The conservative group Citizens United filed an impressive lawsuit based on an array of alleged constitutional and statutory violations by Schneiderman. Schneiderman broke common-sense barriers designed to prohibit abuse of government power when First Amendment rights are in play. For now, Schneiderman skates without his actions being subject to discovery and aired at trial. It is a blow to government transparency and the rule of law over government officials.
With no New York statute requiring him to do so, and contrary to federal privacy law complete with criminal penalties for knowing violations by government officials, Schneiderman began demanding that nonprofit organizations across the country registering with his office to solicit contributions from New Yorkers file their Schedule B list of donors. Schedule B is attached to the information return filed annually by nonprofits with the Internal Revenue Service, and is confidential under federal law.
Schneiderman’s actions affect innocent nonprofits and unwary donors far beyond New York. You may live in Oklahoma and contribute to a nonprofit organization based in Virginia that asks for contributions nationally, yet New York’s Schneiderman wants your name and address. It’s rather creepy.
Under post-Watergate reforms to the tax code, federal law provides strict rules prohibiting unauthorized access to that confidential tax return information. The rigid rules apply to state attorneys general, who are subject to civil and criminal penalties for unauthorized access to and use of that information.
Schneiderman’s use of a dragnet licensing scheme to gain access to Schedule B is unauthorized by federal law. Even under the interpretation of the beleaguered IRS, if access is not expressly authorized under federal law, it is illegal. Dismissal of the case will prevent us from knowing whether Schneiderman and his team knew they were breaking federal law.
The court noted Schneiderman claims that he needs the names of donors for “investigat[ing] potential violations of the charitable solicitation laws, and . . . protect[ing] New York residents from fraudulent solicitations.” This is no more than “pre-crime” government surveillance. Besides, donors are not the ones soliciting New Yorkers for contributions, so Schneiderman’s pretense accepted unquestioningly by the court is implausible.
Besides, Schneiderman could acquire this information on a case-by-case basis if he genuinely had grounds rather than using a dragnet licensing scheme violating the privacy rights of the innocent and unwary. This scheme is worse than collecting anonymous telephone metadata. It puts a bullseye on donors to causes disfavored by Schneiderman.
Donors to nonprofit causes are supposed to be protected constitutionally under a right of private association. In 1958 the Supreme Court ruled in NAACP v. Alabama that state Attorney General John Patterson had overreached in attempting to get the names of supporters of the NAACP in his state. Had Patterson succeeded, the NAACP might well be a footnote in history.
Schneiderman would be pleased if certain conservative advocacy causes went away because their private funding dried up out of fear, while liberal causes and even the dripping-rich Clinton Foundation get taxpayer and foreign government money to supplement their efforts.
The court shifted the First Amendment burden so that Schneiderman didn’t have to establish his need for this private donor information. The court also dodged well-settled Supreme Court precedent that Schneiderman used unconstitutional discretion in unilaterally changing the rules of a prior restraint licensing scheme affecting the exercise of First Amendment rights. The dismissal of the lawsuit by Judge Stein, a Bill Clinton appointee, cut for Schneiderman at every turn.
There’s a long-festering and growing bipartisan anger and resentment in America that the rules have become rigged for those in power, and that the system has been corrupted to favor cronies. Constitutional rights are being weakened or destroyed as the rule of law over government fades away. Too many judges seem oblivious to the need for restraints on government power.
Citizens United will likely appeal, but the costs of protecting rights skyrocket when judges refuse to acknowledge the harm that government officials are capable of doing.