Image: Reverend Al Sharpton
Mike Segar  /  Reuters
Federal and New York officials claim that Rev. Al Sharpton owes well more than $1 million in back taxes and penalties, but have disbanded their probe into his financial dealings.
updated 7/22/2008 12:42:43 PM ET 2008-07-22T16:42:43

Federal prosecutors have disbanded their criminal investigation into the financial dealings of the Rev. Al Sharpton and his Harlem civil rights group, the minister and his lawyers said Tuesday.

Prosecutors concluded that Sharpton’s substantial tax problems were better handled as a civil matter by the Internal Revenue Service rather than in criminal court, his lawyers said.

The IRS and New York state and city tax agencies claim that Sharpton owes well more than $1 million in back taxes and penalties. His organization, the National Action Network, also faces a hefty tax bill.

Sharpton said that both he and the civil rights group would pay off their debts, clean up their books and complete a reorganization intended to ensure the group’s long-term fiscal stability.

“We learn from every experience to be more cautious, more accountable,” he told The Associated Press.

A spokesman for the U.S. attorney in Brooklyn declined to comment.

The investigation was the latest in a string of government inquiries into Sharpton’s finances, dating to his earliest days as a civil rights figure.

Each time, he has emerged unscathed. In the late 1980s he was acquitted of stealing from a nonprofit group. A state case accusing him of evading income taxes also fizzled; he pleaded guilty to a misdemeanor charge of failing to file a tax return and paid a small fine.

This latest investigation became public last year when several of Sharpton’s aides received grand jury subpoenas. Law enforcement officials said the inquiry focused on potential tax violations and possible election law violations during Sharpton’s 2004 run for president.

'I'm just grateful'
Sharpton said Tuesday he was glad to be in the clear. “I’m just grateful to God and my family, and all of our supporters,” he said.

Sharpton’s civil rights group had failed for several years in a row to file income tax returns, obtain workers compensation insurance, or disclose how much it was collecting in donations or paying its top employees, as required by law.

His lawyers said many of those problems have now been resolved, and both Sharpton and his group have also begun paying down their tax debts.

The end of the criminal probe was first reported Tuesday by the New York Daily News.

Michael Hardy, Sharpton’s attorney, said he hoped the resolution of the criminal investigation would silence suggestions that the minister was profiting personally from the dealings of his nonprofit group.

“I think this really clears the air for everyone,” Hardy said.

Sharpton, according to public tax filings and disclosure forms during his presidential campaign, receives little or no salary most years from the National Action Network. His personal income is derived from several high paying media jobs, including his nationally syndicated radio show, book royalties and speaking fees.

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