Tennessee Newspaper Says ‘Anti-Muslim Crusaders’ Make Millions

"The Tennessean newspaper, which has been chronicling the controversy over the construction of a mosque in Murfreesboro, Tenn., has published an investigation into the tax practices of anti-Islamist pundit Steven Emerson, who founded the influential Investigative Project on Terrorism Foundation. The nonprofit rakes in millions every year as it works to uncover terrorist ties to American organizations.

The paper found that Emerson's nonprofit organization funneled everything it earned to a separate group, SAE Productions, that does not have tax-exempt status. In 2008, the nonprofit cut a $3.4 million check to the for-profit, even though Emerson told the IRS in 2006 that there would be no financial ties between the organizations.

Emerson's nonprofit and for-profit organizations also share an address in Washington, D.C., and his for-profit enterprise received grants from a foundation that exclusively awards funds to nonprofit organizations.

""Basically, you have a nonprofit acting as a front organization, and all that money going to a for-profit,"" Ken Berger, president of Charity Navigator, a nonprofit watchdog group, told the paper. ""It's wrong. This is off the charts.""

Emerson's staff said the operation was above-board and that the nonprofit funds are transferred so that Emerson does not have to publicly release the names of his staff alongside their salaries, as nonprofits are required to do."