Marc Morano, CNSNews.com
Tuesday, July 29, 2003

Blaylock & Partners, headed by Ron Blaylock, one of Jackson's Wall Street Project associates, was paid $250,000 by Freddie Mac to broker the report as the "Blaylock Trades."

According to the report, Blaylock began the series of trades in May 2000. The report concluded, "By structuring the trades through Blaylock, Freddie Mac avoided the higher tax burden associated with federal tax regulations."

The Blaylock & Partners trades began less than one month after Freddie Mac and Bank of America announced a $1 billion "joint campaign to increase home ownership among minority families" with Jackson's Rainbow/PUSH Coalition and his Wall Street Project.

The trades with Blaylock & Partners were just one aspect of the more than 100-page report that was released last Wednesday to investigate the company's accounting practices.

The McLean, Va.-based Freddie Mac also committed $1 million in April of 2000 "to help leverage the infrastructure of [Jackson's] Wall Street Project's 'One Thousand Churches Connected'" effort.

The goal of the "One Thousand Churches Connected" project was to provide "economic literacy" to minority families and educate them on home mortgages.

Jackson had criticized Freddie Mac in 1998 in a high-profile campaign that demanded the company end what he called "its racial discriminatory practices within the work environment and lending practices." He called on Freddie Mac shareholders to divest from the firm.

At least one Jackson critic believes the selection of Blaylock & Partners for the trades less than a month after Freddie Mac's announcement of a joint venture with Jackson is suspect.

"I doubt it's a coincidence," Ken Boehm, chairman of National Legal and Policy Center (NLPC), told CNSNews.com.

Boehm, whose NLPC filed a formal complaint regarding Jackson's finances with the Internal Revenue Service in 2001, believes that Blaylock's extensive involvement with Freddie Mac was the result of Jackson's "shakedown" of the mortgage giant.

"It's pretty clear there was a Jesse Jackson shakedown of Freddie Mac along the lines of his shakedowns of other major corporations, and once again, it appears that Blaylock has benefited from his close association with Jackson," Boehm said.

He was referring to Blaylock & Partner's controversial past dealings with Toyota and AT&T. Jackson threatened a boycott of Toyota in 2001 but backed off when the auto company sold a $300 million issue of medium-term notes through Blaylock & Partners and another company closely associated with Jackson, according to Boehm.

Jackson's opposition to AT&T's merger with TCI in 1999 also benefited Blaylock & Partners, according to Boehm.

"[Jackson] dropped his opposition when the companies hired Blaylock & Partners to float an $8 million bond offering. AT&T then gave [Jackson's] Citizen Education Fund $425,000," Boehm said in 2001.

Ralph Nader's Group Critical of Deal

A spokesman for Ralph Nader's Citizen Works corporate reform group called Freddie Mac's trades with Blaylock an attempt to violate corporate rules and tax regulations.

"What the report appears to be saying is that company traders were using Blaylock to get around internal accounting rules and to avoid federal taxes," Charles Cray, director of Campaign for Corporate Reform, told CNSNews.com.

Cray cited Blaylock's role as outlined in the Freddie Mac report as an example of why more corporate oversight is necessary.

"If the regulators don't think there's a problem with unregulated derivatives trading, then why in this case, where the transaction was used to avoid federal taxes, does it appear like Blaylock's role seems awfully similar to that of an offshore bank that doesn't ask where all the money is coming from?" Cray asked.

Cray does not believe Blaylock is the guilty party in the trades, however. "I doubt it would be Blaylock's responsibility to ensure that the trades were properly treated on Freddie [Mac's] books," Cray explained.

But Cray did question why Blaylock did not scrutinize the trades more closely. "If it's common practice to get paid $250,000 and not ask any questions, then maybe there's a problem with the rules," he said.

A spokesman for Blaylock & Associates declined to comment for this article.

Copyright CNSNews.com

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