By Producer
NBC News
updated 6/28/2006 3:41:03 PM ET 2006-06-28T19:41:03

In the wake of the Abramoff influence-peddling scandal, Sen. Chuck Grassley, R-IA, chairman of the Committee on Finance, announced several reforms today designed to improve the transparency and governance of tax-exempt groups.

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Non-profits groups played a major role in Abramoff's schemes to hide funds and avoid taxes. The Finance committee is proposing to double the fines and penalties for non-profit groups engaged in inappropriate political activity.

Investigators from the Senate Indian Affairs Committee forwarded some 112 pages documents to the Finance Committee relating to Abramoff's use of non-profits. They asked Grassley to explore the "instruments to channel money from one entity to another in an effort to obscure the source of funds, the eventual use of funds, and to evade tax liability."

The documents (pdf), released last week as part of the Indian Affair's Committee's final report on the Abramoff affair, shed new light on how the disgraced lobbyist secretly routed his clients' funds through tax-exempt organizations with the knowledge and agreement of those in charge, including prominent conservative activist Grover Norquist.

Non-profit connections questioned
Among the organizations used by Abramoff was Norquist's Americans for Tax Reform. ATR was used as a "conduit" for funds that flowed from Abramoff's clients to secretly finance grass-roots lobbying campaigns. E-mails released last week show that as the money passed through Norquist's organization, he kept a small cut.

Ralph Reed, the former director of the Christian Coalition and a leading Republican Party strategist, was a central figure, according to the Senate report, in the Abramoff scheme. Reed received more than $5 million in payments on behalf of Indian tribe casinos - clients of Abramoff. The flow of tribal money to Reed was hidden by Norquist's ATR who agreed to act as a conduit for one of Abramoff's clients. The Choctaw, a tribe in Louisiana, hired Reed to orchestrate an anti-gaming effort to block new casinos from opening or others from expanding.

In a statement Sen. Grassley said, "We've heard a lot about inappropriate activity by non-profit groups connected to Jack Abramoff. The problem is much bigger than Jack Abramoff. We're seeing more and more charities used in the best interests of lobbyists and special interests, not the public. Some people are exploiting vagueness in the laws or a lack of enforcement to enrich themselves rather than serve the public. It's unseemly for tax-exempt groups to function this way. It's also unfair to the taxpayers who subsidize that behavior."

A Department of Justice probe has brought a string of bribery-related charges and plea deals. The possible misuse of tax-exempt groups may also be under close examination as the investigation continues.

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