Facing Federal Probes, Sharpton Hires Ex-Prosecutor

June 20, 2008 — -- Reverend Al Sharpton is fighting back against government probes of his charity's finances, which he has claimed are politically-motivated, by hiring a former U.S. Attorney to represent him and his National Action Network.

The civil-rights activist told ABC News that he felt compelled to hire Zachary Carter, the former Brooklyn U.S. Attorney, three months ago because the veteran prosecutor is best equipped to understand the workings of his old office.

The twin probes by federal prosecutors and the IRS focus on possible tax fraud by Sharpton's National Action Network and the financing of his campaign for president in 2004, according to the New York Daily News.

"I don't trust this Justice Department," he told the paper.

He also wrote a letter to Rep. John Conyers (D-Mich.), the chair of the House Judiciary Committee, asking that prosecutor's actions be reviewed for possible "abuse of power." Conyers' office did not return calls for comment.

Prosecutors are also reportedly looking into whether major corporations were coerced by Sharpton into giving donations to the charity.

Anheuser Busch, which contributed between $100,000 and $499,000 to NAN in 2007, according to the New York Post, said to the paper that "we have received a subpoena and are cooperating with the IRS."

Sharpton vehemently denied reports in the Post that he twisted arms to get donations from corporations ranging from Pepsi to Colgate-Palmolive by threatening boycotts and protests.

"The whole idea that what I did to these companies is shake them down is beyond me," he told ABC News. "They never claim any company that says that."

Sharpton also says that any payroll taxes owed by his charity are most likely due to the confusion created when a 2003 fire at NAN's headquarters destroyed most of the group's paperwork. "We had to reconstruct the books – because they have to be in order. And they've been back and forth [with the IRS] negotiating the penalty."

Ten staffers at the charity were subpoenaed by the Brooklyn U.S. Attorney's office last December, says Sharpton.

He says he doesn't understand why this matter is being handled by prosecutors because NAN has paid previous tax liens. "What makes this criminal? Let's say, they didn't pay the right amount. We paid them [liens] in the past. So why wouldn't we pay them now?"

As for his own $931,397 federal tax lien from 2007, Sharpton says that some of that involves the charity's obligations which are being negotiated with the IRS. "We have the right to negotiate penalties. If I've had issues in the past, on time or late, we paid them in the end."

His charity failed to file several years' worth of financial reports, according to New York State Attorney General Andrew Cuomo, who handed his probe of the group's non-profit status over to federal prosecutors.

According to NAN's most recent 2006 tax return, the group paid president and CEO Sharpton $4,860 and reported a net deficit of over $2 million.

Sharpton says that his 2004 campaign finances have not been brought up by investigators for the Brooklyn U.S. Attorney's office, which declined comment.

Federal prosecutors and the IRS are probing whether he misstated his fundraising for that campaign so that he could qualify for matching funds, according to the Daily News.

"We settled with the FEC so I have no idea what that is about," he says. In 2004, the agency ordered Sharpton to repay $100,000 in matching funds, claiming that he exceeded the limit on what a candidate can spend on their own campaign.

Carter did not return calls for comment.