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The front-group impresario

By Ryan Chittum

It's always good to see a newspaper take on Rick Berman, the PR powerhouse who specializes in organizing deceptive corporate front groups—and this time it's The New York Times weighing in on its page one.

The press typically does a miserable job of holding Berman to account for muddying the news stream with bought-and-paid-for misinformation, as we have documented too many times over the years.

It's an evergreen angle for us media critics. Chances are, if the Employment Policies Institute—or one of several organizations with think-tank-like names run by Berman's PR company—is quoted in a story or lands an op-ed, its corporate backing won't be disclosed. PR Watch found that the Employment Policies Institute, for one, was appropriately identified by the press in just one in six stories.

That's PR gold for the low-wage employers like fast-food restaurant chains and investors who want their message out but don't want their brands associated with disreputable campaigns spreading FUD about popular issues like raising the minimum wage.

Because Berman "can use fear and anger -- it stays with people longer than love and sympathy," as he said himself in 2010, he's carved a lucrative niche as a reputation laundry for low-wage employers.

That quote ran in May in the Times's then-sister paper The Boston Globe in what was one of the better media stories of last year.

The Globe actually did a better job than the Times of showing evidence of the character assassination, misinformation, threats, deception, and more that have landed Berman the sobriquet "Dr. Evil," as 60 Minutes reported a few years ago.

The Globe told its story by unraveling Berman's smear campaign—and there's no other word for it—against the Humane Society and its leader—a campaign that included an advertisement that asked, with no evidence, "Is Wayne Pacelle the Bernie Madoff of the Charity World?"

Berman may have taken on the wrong group of animal lovers. The Humane Society has filed complaints with the IRS that raise serious questions about how Berman's organization is structured. Berman's fronts are set up as nonprofits, taking in donations and allowing donors to reap tax benefits. Berman's for-profit company then bills the nonprofits for its services, as the Globe reported:

All told, the nonprofit Center received $1.4 million in 2011 in contributions and grants. It spent $2.1 million, of which $1.3 million was paid to the for-profit Berman and Company for management, research, advertising and accounting fees, according to its IRS filing.

I asked Marcus S. Owens, the former head of the IRS's tax-exempt organizations division, whether this arrangement is legal. He tells me that while the IRS allows so-called related-party transactions, it's a grey area because the transactions "can constitute a diversion of the charity's assets to the private benefit of persons in control of both organizations."

I asked Berman & Company for comment. "We don't have confidence in your objectivity and won't be commenting on this story—and you can quote us about your objectivity," spokeswoman Allison Miller said.

Berman's groups thrive in an era of undermanned and outgunned newsrooms, desiccated by a decade of digital disruption. They also take advantage of journalistic traditions of objectivity, which, rather than setting aside biases to find the best sources of information in search of true facts, all too often devolves into he said/she said quotes that cover purport to cover "both sides" but end up misinforming the public.

Not all sources of information are created equally, and Berman's record is replete with well- documented evidence of mis- and disinformation.

Miller did point to a Berman website that says, "After the IRS took a comprehensive look at BAC's non-profit management practices, they did not change the non-profit status of any of the groups they reviewed-nor was any organization sanctioned."

The IRS declines to comment.

But the Times's story speaks for itself:

For example, an academic study published by researchers at the University of Southern California concluded that soda had higher concentrations of high-fructose corn syrup than advertised. Mr. Berman's team, hired by the corn refining industry to defend its sweeteners, mobilized staff at his Center for Consumer Freedom to challenge the results.
"If the results contradict U.S.C., we can publish them," said an email sent to Mr. Berman and other staff in October 2010 from a Berman employee at the time, referring to the University of Southern California report. The exchange became public recently as a result of a lawsuit between the sugar and corn refining industries. "If for any reason the results confirm U.S.C., we can just bury the data." Mr. Berman said that the employee who wrote that email no longer worked for the firm and that such practices were not allowed at the institute.

That sums up why journalists should carefully scrutinize quotes from Berman's groups before running them and why they should thoroughly identify them in any case. This copy from Berman's website is all too accurate:

Using innovative messages and creative outreach tactics, we successfully change the debate in broadcast, print, and online media. Because we develop specialized expertise on selected issues, media contacts know to turn to Berman and Company for the most informed experts.

Our representatives regularly appear in major media outlets, in most cases providing the only voice of the business community. Over and over again, the opinion pages of major newspapers run op-eds on behalf of our clients.

As the Times and Globe have shown, that's a problem for the news.

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