Politics & Government

Tax-exempt status of Olympia-based think tank under challenge by channeler JZ Knight

The tax-exempt status of the Freedom Foundation, a conservative think tank, has been called into question by lawyers for Yelm-based spirit channeler JZ Knight.

Knight, who has a long-running battle with the Olympia-based foundation over its use of her videotaped spiritual talks, contends the group is acting as a politically partisan organization.

As a result, Tacoma lawyer Brooke Johnson says it does not deserve its tax-exempt status as an educational organization, which is how it was set up in 1991 with a promise of “regular and bipartisan communication with elected officials” and others.

“There is nothing wrong with advocating your position, but what we are seeing is action on a political agenda and being aggressive,’’ Johnson, who specializes in intellectual property rights and nonprofit organizations, said in an interview. “They are aggressively pursuing people they consider to be enemies.”

David Dewhirst, in-house counsel for the foundation, says the complaint sent by Johnson to the IRS last month is “completely ridiculous” and an attempt to intimidate the Freedom Foundation.

“I think it’s another case of JZ Knight and her school trying to bully people and groups they disagree with,’’ Dewhirst said.

The IRS does not comment on pending tax-status matters, according to a spokesman. But the organization’s website says it acknowledges all such complaints with a letter to both the maker and target of a complaint. Johnson said, based on her experience, that might take six months, and a final decision could be 18 months away.

The foundation, a right-of-center think tank that advocates for free enterprise and limited government, has been fighting Knight and her Ramtha’s School of Enlightenment in court this year. At issue is the foundation’s actions since 2012 to publicly disseminate videotapes showing Knight — or Ramtha, the 35,000-year-old Lemurian warrior Knight says she channels — speaking at seminars and making offensive remarks about Catholics, gays, Mexicans and Jews.

In 2012, the foundation’s public airing of the videos shamed the state Democratic Party into giving away $70,000 of Knight’s campaign donations, and Thurston County candidates getting Knight’s contributions also gave away the money.

In her complaint’s 255-page addendum, Johnson noted that the foundation has used those videotapes “to both denigrate my client and, at the same time, accomplish its own goals of reducing Democratic candidates’ available funds.”

But it hasn’t acted similarly against Republicans or Libertarians, Johnson said.

Knight’s business, JZK Inc., filed suit in May in U.S. District Court against the foundation and staffer Glen Morgan, claiming copyright infringements on the videos, and a trial is scheduled in Tacoma for November 2015.

“We believe this is a desperate attempt by a woman whose grand illusions and political influence came to a jerking halt when Freedom Foundation shined a light on her political donations,’’ Dewhirst said.

Dewhirst said the foundation learned about the IRS letter during a week Knight and her school’s lawyers were mulling a second legal settlement offer that the foundation had sent them on the copyright case.

But Johnson said the complaint didn’t actually originate with Knight or her school. Instead it came from Johnson, who said she got interested in the foundation’s actions while researching some intellectual property issues surrounding the copyright lawsuit for Knight’s business.

In the course of that research, she became convinced the foundation was acting well beyond the scope of what the IRS allows for tax-exempt 503(c)(3) organizations.

Johnson noted the foundation’s efforts since 2012 that slammed Democratic candidates and political parties over Knight’s campaign donations, and she cited state Public Disclosure Commission reports showing that Republican candidates and organizations, and not Democratic groups, have donated to the foundation over the years.

In sharp contrast, Johnson noted, the foundation has not acted against intemperate speech by those on the far right end of the political spectrum. Her complaint papers note that the foundation’s chief executive, Tom McCabe, issued an invitation to Ted Nugent, the rock-musician-gun-rights advocate, in August to speak at its Northwest Freedom shootout after the Emerald Queen Casino in Tacoma canceled Nugent’s show over comments he’d made about President Barack Obama.

Nugent referred to Obama as a “subhuman mongrel,” according to news accounts. McCabe, in his invitation letter, derided what he called “the left’s mock outrage” over Nugent’s comments about Obama, and he said Nugent’s terms were “absolutely not racist,” according to Johnson.

“They were very willing to talk about racism … and on accepting contributions from people who hold those views when it comes to Democrats,” Johnson said. “But they completely flip that view when talking about a Republican figure and basically applaud him for the same view.’’

Morgan, a foundation employee and target of Knight’s lawsuit over videotapes, scoffed at the criticism and said Knight’s team was being selective in its choice of examples.

“With Republicans, we beat up on them when they do stupid stuff, too,’’ Morgan said.

He pointed to a piece on the foundation website from July that mildly criticized a bill from Republican state Sen. Randi Becker of Eatonville, who sought to impose a licensing requirement and $20 fee on bicyclists.

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