TAX CASE HELD UP FOR C.I. A CONDUIT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75-00149R000700040036-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 16, 2016
• Document Release Date: December 27, 2004
• Sequence Number: 36
• Publication Date: March 5, 1967
• Content Type: NSPR

h~AR 5 ~1 /~ des
Approved For Release 2005/01/05 : CIA-RDP75-0014r00?b7(3~ fu
But a former intelligence
In ?1363,
ni Y d mil D t was some tine delay as - ?treceived from the the labor Kaplan institutFunde agency officer, explained the
t
' 'Ir, Rogovin said. S-.93,000 contributed to Kaplan, decision this way,
El result,,
X C t
. i ;i Ai A This is t e background of the' the Price, Edsel, Borden, "They [the C.I.A.] didn't
by - 4now of the I.R.S. trouble.
? Kaplan fund case: ! Beacon and Kentfield funds. They didn't even look at
? ] 1 ~ On March 29, 1937, afters In 1964, the year of the Fat- Y
man hearings, the Kaplan Fund (Kaplan's) 090-A's." The 990-A
ceased being a conduit. s the listing of assets, income
COiLJ!i Le ngthy investigation, Donald]
from investments -
and contribu
R, Aloysey, district director of ;Meanwhile, according to in- lions received and disbursed
t
!inquiry Into Kaplan Fund of
New York Put Off 2 Years,
but a Deal Is Denied
By E. \'t'. KLNWORTIIY
5?cclal to Tht New York TlmeI
WASHINGTON, March 4
An investigation of the J. M.
Kaplan Fund of New York City
by the Internal Revenue Service
was held in abeyance for two
years because the fund was
serving as a conduit for money
from the Central Intelligence
Agency.
This inaction was ackhowl-
jedged by ta:: agency officials
when they testified in August,
1964, before the subcommittee
bn foundations of the House Se-
lcot Committee on Small Busi-
ness, headed by Representative
Wright Patman, Democrat . of
Texas.
However, the officials Insist-
ed at that time, and insisted
again this week, that' the tax
agency had not been a party'to
any arrangement between the
Kaplan Fund and the intelli-
gence agency.
'A Sensitivo 'Matter'
They also insisted then, and
again this week, that the Kap-
lan Fund had been given "no
immunity," as a result of its
the tax agency for lower Man- formation furnished Mr. Pa
man that must be filde with the tax
hattan, notified the Kaplan by the' Kaplan fund's attgrney,l
fund that there was "substan- i there ,were no conferences 'with `
tial basis" for revoking its tax- the revenue service between, agency by tax exempt organ;
1964,
and July 28
1962
6
,
,
,
izations.
exempt status and that it had; July 2
1 After learning of the trouble
out the fund's finanal recommended revocation-"get-1I' actions in the years 1957 tor1960
roactively and prospecLively "-f Testimony in 1064 In 1961, the formed intelligence!
to the. agency's commtssioncri officer said, a decision 'was
Mr. Patman said that 0'Mr? glade to stop using the Kaplan
in Washington. Rogovin [the tax service liaison
The reasons given were that) man] informed us that the J. fund,' but the decision was not
the Kaplan fund "Was nc.vcrl M. Kaplan Fund has been carried out until after the Pat-.
Intended to be from its incep-I operating as a conduit for Chan- man hearings.
tion" in 1944 '.'availed of for) cuing C. I. A. funds and' indi- He said the Intelligence agen
sated that the fund's opera- cY officials "don't really know)
purely charitable, oses"ttha what's going on domestically."!
or other exempt purposes" that, tons with i the C. I. A. was the ?They g on naively. They'
I r r eaason son foor rfife lack of action on
It had not operated as such; the part of I.R.S." live out in the boondocks [in,
and that it had borrowed large In the 1964 hearings this ex- Langley, Va.], ,deeply isolated`
I from reality," he added.
sums from its creator, J.Ai.;, change took place between Mr..
Kaplan, for business and trad- Patman and Mr. Rogovin, who A Similar Case
ing purposes. is now Assistant Attorney Gen- In the four years 1061 through'
The Kaplan fund protested ' cral in charge of the tax divi- 1964, the intelligence agency
this finding, as it ways per- : lion of the Justice Department; also used the David, Josephine
mined to do per-'' Q. Did the C. I. A. ask the and Winfield Baird Foundation
t I. I.R. S. for its opinion as to of New York,to channel $?1,56,-
On. Jan. 7, 1958, the MW ciis-i whether the Kaplan fund should 800 from front foundations to
trict director, Raphael 'iciscls,'' ;ie used as a conduit to chan- a number ? of organizaitons,
upheld the original rccomntcn-'ynel C. I. A.,funds? A. It'did not, chiefly the African - American:
dation. to the best of my knowledge. Institute, the American Friends
Then, on March 24, 1960, Q. Did the I. R. S. recomr of the Middle East and the In-
mend to the C. I. A. that the ternational Development Foun-
Kenneth W. Aloc, successor to conduit -to channel C. I. A. dation,
Air. Mcisels as the direction 'of: , funds? A. Again, not to the It did, this despite the fact
Washington, overrode the car best of my knowledge. that in March, 1959, the New
?licr findings and notified thel Mr. Rogovin went on. to say York district director of the
fund that its returns for the ? that "the C. T. -A. did not ad- tax service proposed revocation
i
1952 bluou h 1056 would vise us or ask us for our advice of the foundation's tax-exempt
years g ? regarding their 'dealings, with status for'1951 through-1959.
be accepted and its exemption l', the Kaplan fund." ' The Washington office again
upheld for those years, i, In late 1961, he continued, the, overruled this recommendation,
Audit for '37-'GO Begun tax service first became aware ,but only after the D-J-W Baird
of the intelligence agency's in- i Foundation and two other Baird
However, in January, 1961,1 terest in the Kaplan fund "when 1 foundations -- Winthrop Baird
the lower Manhattan director 1 they contacted us to indicate Foundation And Lansing Foun-
began an audit of the Kaplan I that they had been led to be- ' dation-agreed to distribute all
fund for 1958 through 1960.' 'love that an audit was being their assets to boa fide chari-
e Pat? ;conducted of the n n fund." table organizations and dissolve
C.I.A. connection, from the pos-1
t
l
f
'
ear
rom
It is not c
ccrn "They were concerned as
h
to themselves b Dec. 31; 1065,
sibility of having its tax-ex 3'
cmpt sttitus revolted' or having man subcommittee hearings', whetl]er or not their interest in I This agreement has not yet
whether the intelligence agency.; the fund would be made public 1been effected because the
to, pay tax penalties If it were made the conduit arrangement ...." he added. D-J-W Baird' Foundation , is
found to be in violation of the with the fund in 1959 or 1960.: Mr. Rogovin said the intelli- contsting in Tax Court the gov-
law. ' But it seems clear that the ar-' gence agency had told the tax ernment's claim of $1,341,679 in
Mitchell Rogovin, who was rangement was not put into ef- service that it had not been 1taxes for the years 1960 to
then the revenue service's- liai= feet until 1961- aware of the examination of the 1964, and. the: Winfield Baird
In that year, the fund' Kaplan fund that had been go- Foundation is contesting an as-
son with the intelligence agency,; received $308,950 from five 1 ing on then for at least six sessnient for the same years of
told Mr. Patman, in explaining foundations that Mr. Patman I years. I '
the delay, that the use of the $4Simi characterized as C.I.A. fronts- Unansivored Question Similarly, because of a tax
Kaplan fund by the C.I.A. was 'tile . Gotham Foundation, the It was never made clear why case involving a. Kaplan com-
a sensitive matter." ; Michigan Fund, the Andrew , the intelligence agency did not pang - Jemcap, Inc.-the tax
'We were dealing with it' in Hamilton Fund, the Borden have this knowledge, or why, agency has not' completed the
ern., dit of the Kaplan foundation
a sensitive fashion, and t Trust and the Price Fund. The { when it learned of the situation au
Kaplan -~ , KFund contributed the +n late 1061, it continued to use for the years 1958 to 1063,?
w
uld
K
l
t
f
t
d M
an
o
e o
r.
ap
ol
sane amount to the Institu
: the Kaplan fund for two more which it
International Labor Research, years, be finished by July 31, 1065. j"
.Ina. When asked' about this yes- However, the Jenicap case,
In 1962 the Kaplan Fund de? terday, a former high official was settled in February, 1066,
livered to the labor institute of the tax agency said, "It's for $450,000, aid officials said: ,
$220,000 it received from the amazing." ,today that the whole question
Price Fund, Edsel Fund, Beacon And on official in the gen. ?;of the Kaplan foundation's tax-,
Funcl and Kentf(eld Fund-all oral counsel's office of the In. ?; exemption 'hadbeen rcactivated:,
enc
ked
telli
ace
h
. - ... .. __ _ .
chars . ~.,___......... ,
, g
/, --.
g .
,,
the Kaplan fund had begn se-
Approved For Release 2005/01/0& &--`'~~ (f5