The Escalating Obesity Wars
Wednesday, April 27, 2005
The full-page newspaper ads shout "Hype" at readers, warning them that they have "been force-fed a steady diet of obesity myths by the 'food police,' trial lawyers, and even our own government."
The sponsor, the Center for Consumer Freedom, is a "nonprofit organization dedicated to protecting consumer choices and promoting common sense," the ad notes.
The group was founded about 10 years ago with tobacco-company and restaurant money to fight smoking curbs in restaurants. Back then, the group called itself Guest Choice Network. But it changed its name in 2001, as it shifted its focus to food and beverage issues, raised by concerns about obesity, mad cow disease and genetically modified products.
The group and its ads are the brainchild of Richard Berman, a Washington lobbyist and lawyer who is the center's executive director. Berman is also president of Berman & Co., a public affairs firm that in 2003 received more than $1.1 million in compensation from the nonprofit group -- more than a third of its revenue that year, according to its most recent tax returns.
Berman, 62, also is the founder of two other restaurant-supported groups: the American Beverage Institute, which fights restrictions on alcohol use, and the Employment Policies Institute Foundation, which has argued against raising the minimum wage -- a move that would hurt restaurants because of their large staffs of low-wage workers.
Philip Morris USA Inc. pledged $600,000 -- most of the seed money -- for Berman's group in 1995. The company said it needed a consultant who was both a "hospitality industry insider as well as a legislatively astute individual," according to documents collected as part of the multi-state lawsuit against tobacco companies. Under the 1998 settlement, the documents were made public. Philip Morris continued to give money to Berman for several years, as did restaurant firms such as Host Marriott Corp. and Brinker International Inc., which owns the Chili's Grill & Bar and Maggiano's Little Italy restaurant chains. Neither firm returned phone calls about their ties to the Center for Consumer Freedom.
Berman declined to give specifics about who funds the Center for Consumer Freedom. He said only that it is funded by a coalition of restaurant and food companies as well as some individuals. "It doesn't add anything" to give details, Berman said.
According to Citizens for Responsibility and Ethics in Washington, a watchdog group funded by several educational foundations, Berman and his firm have received more than $7 million since 1997 from the Center for Consumer Freedom and one of the other groups he founded. Last fall, the watchdog group asked the Internal Revenue Service to revoke the Center for Consumer Freedom's 501(c)(3) tax-exempt status. The watchdog group said Berman has used the center to funnel money to himself and his company, a violation of federal tax law that bars companies or individuals from running a nonprofit for their private benefit. The organization also said that the group's activities were solely to promote the causes of restaurants and food producers, not consumers. Its activities, the organization said, are "not remotely charitable."
Jeffrey S. Tenenbaum, a Washington lawyer who specializes in nonprofit tax law, said that generally, for a group to qualify as a 501(c)(3) educational organization "there has to be bona fide education of the general public on given issues as compared to advocating particular industry positions." Otherwise, the group should qualify as a 501(c)(6), a trade and professional group. While both are both tax-exempt, a 501(c)(6) cannot receive tax-deductible charitable contributions.
Berman called Citizens for Responsibility and Ethics in Washington's charges "a silly thing . . . totally and factually false." It's not unusual, he said, for public affairs firms to manage nonprofits, and the expenses his firm received were to "buy all sorts of things, including employee time, rent, phones." Berman said the Center for Consumer Freedom is a legitimate, nonprofit educational group. "I haven't heard from the IRS, and I don't expect to; there's nothing to it."
"It's pretty obvious we're advocating from a point of view," Berman said. "But you can advocate and educate at the same time."
Berman said the charges are the "cost of doing business" of criticizing well-known activist groups such as People for the Ethical Treatment of Animals, Center for Science in the Public Interest and the Physicians Committee for Responsible Medicine. "It's to be expected when you give people a little heartburn, they don't like what you're doing."