This partial transcript from The Edge with Paula Zahn, May 1, 2001 was provided by the Federal Document Clearing House. Click here to order the complete transcript.

(BEGIN VIDEO CLIP)

REVEREND JESSE JACKSON, RAINBOW/PUSH COALITION: We can help investigative journalists. But when you've got a combination in these times of pay for check journalism, glorified by The Post and Fox owned by Murdoch, with a decided political agenda, and then O'Reilly gets a raise and ratings off of your life, that is a little different.

(END VIDEO CLIP)

PAULA ZAHN, HOST: On the Investigative Edge tonight: Jesse Jackson's amended tax returns. Do the numbers add up? The forms in question were filed recently by the Citizenship Education Fund, one of Jackson's four charitable organizations under intense scrutiny. Ron Dreher of the New York Post has been investigating and joins us now in the studio with his findings.

Set the record straight. Do you have a vendetta against Jesse Jackson?

ROD DREHER, NEW YORK POST COLUMNIST: Of course I don't. I just see a good story out there that nobody else is going after. Only Fox News, the New York Post and the two Chicago dailies are putting heat on this, on Jesse Jackson, for what is a legitimate story.

ZAHN: So what do you make of his charge that -- that you basically are using his life to make money? Checkbook journalism.

DREHER: That's -- of course he's going to say that. What else can he say? He's got no answer for the documents that we have and we've been looking at and asking hard questions on. So he's going to make it a personal attack.

ZAHN: You've had a chance to analyze these tax returns. What -- what are the most glaring examples either of sloppiness or downright errors?

DREHER: Downright errors. Well, as you know, back earlier this year, he was criticized for his 1999 tax returns for the Citizenship Education Fund for leaving out a lot of information. Well, he said, "We're going to file an amended return and correct that information." Well, the amended return is in, and I have it right here. I was looking at some of the corporations whom he says on here gave him money, gave CEF money. One of them was the New York Board of Education. When I called the New York Board of Education, they said, "We didn't give him anything." So I said, "Something's fishy here." I started calling other corporations, and they said either "We didn't give him anything" or "We wrote a check, but to a different organization." Now, if CEF is claiming on their tax returns that they received this money...

ZAHN: That's out-and-outright fraud!

DREHER: That's fraud. That's co-mingling of funds. And Jesse signed this tax return himself under penalty of perjury that this is correct. I found already four or five errors on here, blatant errors of fact.

ZAHN: Well, for starters, when it comes to Microsoft giving money to this Citizenship Education Fund, they list what...

DREHER: Microsoft...

ZAHN: ... home base as Red -- what, Redmond, California...

DREHER: Redwood, California.

ZAHN: Redwood, California.

DREHER: Redwood, California. It's in Redmond, Washington. Simple little silly things like that. They listed...

ZAHN: But that's not fraud. That -- that -- that -- you could write that off to sloppiness.

DREHER: Exactly. But what is potentially fraudulent is the fact that they're claiming that $25,000 Coors Brewing gave to them, gave to CEF. I called Coors Brewing. They said, "Well, we did cut him a check for $25,000 that year, but we wrote the check to Rainbow/PUSH," which is a separate organization within Jackson's empire. And you can't co-mingle those funds. It says here on this form, "Do you certify that no funds were co-mingled?" "Yes, I certify that no funds were co-mingled," signed Jesse Jackson. Now, if you or I tried to get away with that, the IRS would be all over us. Why aren't they investigating him?

ZAHN: All right, move on to the issue of Karin Stanford, the mother of his -- his child.

DREHER: Right.

ZAHN: Illegitimate child. Is she listed anywhere on these tax returns?

DREHER: She is. She's listed as the vice president of programs in D.C., her salary $67,249.

ZAHN: Were you able to verify that? Did she get that money?

DREHER: I don't know. I didn't even look at that. I was looking at the corporate contributors. But this is the first time we have seen that salary. This is one of the things he was criticized with the first filing. They didn't list her salary or any of the other top five compensated employees there.

ZAHN: But we did -- we did have an idea of what she was allocated for moving expenses.

DREHER: Sure.

ZAHN: To move her from the East Coast to the West Coast.

DREHER: Sure.

ZAHN: And that was documented.

DREHER: Sure. Sure.

ZAHN: Was it not? And she was given, what, $40,000 in cash.

DREHER: Something like that, yeah. They -- they changed their story a couple of times. I don't think we know exactly how much she was given. But to me, the scandal now is who's giving him money? Are they really giving him money? And is he lying on his tax returns?

ZAHN: How -- I know you've started to call even more corporations on the list. Have some of them simply just not returned your phone calls?

(CROSSTALK)

ZAHN: So you can't even verify...

DREHER: Sure.

ZAHN: ... for those who haven't answered, whether they ever wrote a check to Jesse Jackson.

DREHER: That's true. Merrill Lynch I've called. Salomon Smith Barney I've called. They have not responded to my calls.

ZAHN: So what do you think that means?

DREHER: I don't know. Maybe it means they're having a tough time checking their records. These are big companies. You have to be fair to them. It's tough to find out who gave you money -- where you sent your money in 1999. On the other hand, maybe they don't want to have anything to do with this because they know that Jesse's a sloppy bookkeeper, and it's going to come back to hurt him if the IRS ever gets off its duff and does its job.

ZAHN: Give us the most honest analysis you can of what percentage of this stuff is sloppiness and -- and what percentage is -- is pure illegal intent.

DREHER: I don't know the mindset of Jesse's accountants or Jesse Jackson here. I can't plumb that. It could well be pure sloppiness, but ignorance of the law and sloppiness is no excuse. If you or I were audited by the IRS and we said, "Oh, we just made all these errors," do you think they would buy that? Maybe they would the first time. Jesse had a chance to correct these forms. He submits the second amended form, and it's -- it's even worse than the first, in some respects. So whether it's malice or just plain ignorance, I don't know.

ZAHN: How about arrogance? Could that be one of the -- the factors?

DREHER: I think it must be arrogance. They haven't been audited since 1982. I suspect that they thought, "Well, we're never going to get audited. We don't really have to be good bookkeepers here." Well, now they're being asked to justify this, and they can't do it.

ZAHN: What will be the impact on these other organizations if, in fact, it's proven these funds were co-mingled?

DREHER: It depends on what the government wants to do. I mean, I think already the IRS could have a good case there, but I really don't know. Only they have the power to subpoena these records and do a thorough investigation.

ZAHN: To your knowledge, have these records been subpoenaed?

DREHER: To my knowledge, they have not. But the IRS doesn't generally share that information.

ZAHN: All right but they've -- obviously, people at the IRS read newspapers, and they'll see your columns. How much ammunition do you think they have? They have access to the same documents you have.

DREHER: Oh, yeah.

ZAHN: Walk us through what they potentially could be doing right now.

DREHER: What they -- what they could be doing is checking every one these things for the past 10 years, say. This is one set of IRS forms for one year for one of Jesse Jackson's four organizations. And I found so many errors on there. What else is there to find? Only the IRS has subpoena power. But if there's no pressure from Congress and no pressure from the people to look into this -- and so far there hasn't been -- the IRS is just going to sit on it because they don't want to be called racist.

ZAHN: OK, as this story continues to stew, give us some insights as to what is going on at these umbrella organizations. Is there a sense of fear that maybe Jesse got caught?

DREHER: I'm told that there is. I don't have any sources inside these organizations, but my sources, who used to be involved with them, say that there's -- they're in a state of lockdown now. Jesse's attorney, Willie Gary (ph), has come there and read them the riot act and said: "Don't talk to the media. Be quiet." You know, "Let's sit on things, and maybe this will blow over." I also understand that there's another investigation that 60 Minutes is doing of another part of Jackson's empire that may prove very damaging. We don't know. I know for a fact that this thing is underway, but I don't know how far they've gotten. So they're kind of waiting for that shoe to drop, as well.

ZAHN: Rod Dreher, thanks for keeping us posted.

DREHER: Glad to be here.

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