Accountant: Nonprofit never sought to pay Fumo

An accountant hired by the controversial nonprofit at the heart of the corruption case against former State Sen. Vincent J. Fumo testified yesterday that no one at the organization ever suggested that Fumo should be paid for raising millions for the group.

Federal prosecutors used testimony from the accountant, Ronald Beckman, to deflate the defense contention that Fumo had legitimately been compensated by Citizens' Alliance for Better Neighborhoods.

Fumo is charged with extracting $1.4 million in illegal benefits from the group and lying about it on the group's tax forms.

But the defense bored in hard on Beckman, forcing him to admit that his accounting firm had made mistakes in filing tax returns for Citizens' Alliance.

Thus, the defense suggested to the jury, Fumo and his codefendant, Ruth Arnao, former aide and ex-director of Citizens' Alliance, could hardly have been expected to file accurate disclosures about matters that confound even the professionals.

The pair are accused of illegally spending the nonprofit's money on a host of personal items, including $250,000 in political polls and shopping sprees at Home Depot and Sam's Club.

Beckman, of the Philadelphia accounting firm Drucker & Scaccetti, said he had reviewed the nonprofit's internal records to prepare tax returns. Nowhere, he said, did he find documentation of payments to Fumo.

"If there were, we would have expected to see it," Beckman said under questioning by Assistant U.S. Attorney John J. Pease.

However, defense lawyers Dennis J. Cogan and Edwin J. Jacobs Jr. argued that the prosecution was trying to criminalize conduct that was not barred under nonprofit laws.

On the issue of polls, for instance, the pair argued that federal law does not ban all political spending by nonprofits, but only spending explicitly tied to help a specific candidate and campaign.

And, they say, Fumo used the polls for strategic evaluation of the overall political landscape, not in any specific race.

To underscore the complexity of the politics question, the defense noted that the IRS issued guidelines last year on permissible political activity by nonprofits and that the agency had to explore 21 scenarios to clarify the issue.

Under cross-examination by Jacobs, Beckman acknowledged errors on some of the Citizens' Alliance tax filings. When Jacobs characterized one such mistake as a "whopper," Beckman disagreed, dismissing the issue as a minor clerical error.

Beckman testified that when he was retained in 1996 to resolve tax issues for the nonprofit, he found that it had never filed any tax returns, had not sent W-2 or 1099 tax forms to any of its employees, and that its record-keeping system was little more than a basic checkbook.

"Basically, there was no accounting system in place," Beckman told the jury.

He testified that it took about three years to file all the tax forms and to apply to the IRS for tax-exempt status for Citizens' Alliance, which had been formed to revitalize the Passyunk Avenue area of South Philadelphia.

And then, he said, his firm's contract was terminated.

Though Beckman said he had no specific knowledge of why, he said he believed it was because Fumo was in the midst of divorce proceedings with Beckman's accounting partner, Jane Scaccetti.