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White supremacist gets good news in midst of setback

By Douglas Lee
Lawyer, Ehrmann Gehlbach Badger & Lee

Maybe Matthew Hale has something to be thankful for after all.

The day before Thanksgiving didn’t start well for Hale, the would-be lawyer and Pontifex Maximus (Supreme Leader) of the World Church of the Creator. On Nov. 21, the Illinois Supreme Court upheld the state’s Solicitation for Charity Act, which requires charities to register and report their finances to the government. The ruling reversed a Cook County trial court and reinstated the state’s legal bid to force Hale’s white supremacist organization to register as a charity. As a result, the group faces a $1,000 fine and an injunction against further fund raising in Illinois.

On the same day, however, the Illinois high court in another solicitation case rebuffed Attorney General Jim Ryan’s attempt to charge VietNow fund-raisers with fraud, saying the Solicitation Act did not strip solicitors of their First Amendment rights. Thus there’s good news for Hale: If he can beat Ryan’s request for an injunction, his World Church of the Creator can craft its fund-raising message free of Ryan’s influence.

The ruling in Hale’s case, People ex rel. Ryan v. World Church of the Creator, was not a surprise. Although Ryan’s motives were suspect — he filed suit shortly after World Church member Benjamin Smith killed two people and injured nine others during a 1999 shooting spree — little doubt existed that Hale’s group was a “charitable organization” as defined by the Solicitation Act. While the trial court said the statute did not adequately define “charitable organization,” it ignored several judicial opinions defining the term.

The trial court’s other concern — that the law seemingly allows Ryan unbridled discretion in prosecuting alleged violators and thus threatens the First Amendment rights of unpopular speakers — was addressed in the second case, People ex rel. Ryan v. Telemarketing Associates. In that case, Ryan brought fraud and breach of fiduciary duty claims against the organization hired by VietNow to solicit funds in Illinois. According to Ryan, the solicitors acted fraudulently when they failed to advise donors that only 15% of the funds collected would be given to VietNow.

At first blush, Ryan’s suit seemed to have merit. The evidence was undisputed that only $1.1 million of the $7.1 million raised in Illinois between July 1987 and December 1995 made it into VietNow’s coffers. The remaining $6 million was retained by Telemarketing Associates to cover fund-raising fees and expenses. Ryan surely was correct that donors were misled when they were told their donations would further VietNow’s charitable purpose.

Fortunately for the First Amendment, however, the court looked beyond Ryan’s numbers. Citing a trio of cases decided by the U.S. Supreme Court in the 1980s — Village of Schaumburg v. Citizens for a Better Environment, Secretary of State v. Joseph H. Munson Co. and Riley v. National Federation of the Blind of North Carolina — the court held that solicitors’ right to engage in protected speech cannot be denied solely because their administrative expenses are higher than the government deems appropriate. Nor, the court said, can the government compel fund-raisers to inform potential donors of the percentage of donations that ultimately reaches the charity.

At the core of the court’s ruling was its rejection of Ryan’s fundamental premise — that a nexus necessarily exists between high solicitation costs and fraud. As the U.S. Supreme Court pointed out in Schaumburg, Munson and Riley, high solicitation costs can be attributed to a number of legitimate factors, including expenses associated with producing a wide-range marketing program, costs beyond the control of the organization and the unpopularity of a charity’s purpose.

The court also rejected the notion that the net proceeds delivered to a charity are the only benefit the charity receives from the solicitation. In fact, the court said, charities often obtain nonmonetary benefits from solicitations, such as dissemination of information, advocacy of their cause and goodwill. “Consequently,” the court concluded, “any rule of law which burdens speech by requiring solicitors to make statistical disclosures, at the point of solicitation, is not narrowly tailored to the state’s asserted interest of protecting the public from being misled about the way their charitable dollars are being spent.” Without such narrow tailoring, these burdens on speech cannot survive First Amendment scrutiny.

The court’s ruling bodes well for Hale and other fringe fund-raisers for at least three reasons. First, it prevents Ryan and other officials from using the high cost of the groups’ speech against them. Second, it discourages officials from using unsupported assumptions as bases for regulating unpopular solicitors. And third, it strongly reaffirms the principle that government must have a compelling reason to inject itself between a speaker and a listener.

Maybe this doesn’t mean much to Hale today. In light of the difficulties he’s had in Illinois courts so far, however, it should.


Illinois high court rejects challenge of charities law

State attorney general sued white supremacist's World Church of the Creator for failing to register as a charity and disclose its finances. 11.26.01

Supreme Court to review telemarketing case
Illinois high court 'transformed the First Amendment into a license for unscrupulous fund-raisers to defraud the public,' state attorney general says in filing. 11.04.02

High court answers call to re-examine charitable solicitations
By Tony Mauro Decision to hear Illinois telemarketing case suggests justices may be ready to limit First Amendment protection for solicitors. 11.05.02

White supremacist's battles with state prove wrong is sometimes right
By Douglas Lee Illinois officials have done for Matthew Hale what he never could have done for himself: They legitimized his beliefs and made him the victim rather than the oppressor. 07.23.99

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