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Fumo group filed no taxes for years

Witness: Millions from Peco unreported

A tax accountant hired in 1996 by a nonprofit agency created by former state Sen. Vince Fumo told a jury at Fumo's federal corruption trial yesterday that Citizens Alliance for Better Neighborhoods had no accounting or payroll systems when he started the assignment and that it had not filed any tax returns since 1991.

Ronald Beckman testified that it had taken him and others three years to pull together the paperwork to complete the tax returns from 1991 to 1998, which were filed in 1999.

Beckman's testimony also undercut a key argument by the defense. He testified that he had never been told by anybody at Citizens Alliance, including co-defendant Ruth Arnao, that Fumo was compensated for fundraising he did for Citizens Alliance.

Prosecutors say that Fumo and Arnao looted Citizens Alliance of more than $1 million for their personal benefit and kept their tax accountants in the dark.

Even though the agency had been running since 1991, the IRS didn't give Citizens Alliance its tax-exempt status until 1999.

The defense contends that gifts Fumo received from Citizens Alliance - tools, construction equipment for his farm and use of its workers to pick up trash - were "comps" for Fumo's fundraising on behalf of the agency.

Fumo litigated a settlement with Peco Energy in the late 1990s that resulted in $17 million in payments to Citizens Alliance. The payments began in 1998 in annual increments of $1 million. In 2002, Peco also made a $10 million payment.

According to Citizens Alliance's 1998 tax return, admitted yesterday, the agency did not disclose the source of the $1 million contribution, nor was anything reported on the line for professional fundraising fees.

Defense attorney Ed Jacobs Jr. sought to persuade jurors that tax filings are complex and mistakes are common if unintentional.

For example, Jacobs pointed out that Beckman's firm had not reported its fees for work on the 1996, 1997 and 1998 Citizens Alliance tax returns on the line for accounting fees, as required.

Beckman testified that they were probably included on a separate line for professional fees.

"You weren't trying to hide anything or do anything sneaky, were you?" Jacobs asked.

"Nope," replied Beckman, a partner at Drucker & Scacetti, a CPA firm co-founded by Fumo's former wife, Jane Scacetti.

A second government witness said that he had been contacted by Ken Snyder, a political consultant who worked for Fumo, to do polls in March 2002 to gauge the strength of then-Mayor John Street and four City Council members up for re-election in 2003.

The pollster, Thomas Kiley, said that the poll results had been sent to Snyder's home address but had been intended for Fumo's use.

Kiley testified that Snyder had told him to bill Citizens Alliance for the work. Kiley's firm was paid $44,800, according to two checks from Citizens Alliance Holdings admitted as evidence yesterday.

The defense suggested to jurors that the polling had as much of a public purpose - how voters felt about certain issues - as it did a political purpose.

A tax-exempt agency such as Citizens Alliance is prohibited from engaging in political activity except in limited circumstances. *