Amassing millions of dollars and playing the stock market with it:
Unlike almost every other nonprofit organization, Nader's various groups often amass a nontaxable profit of several hundred
thousand dollars per year, and have rapidly build up impressive net worth's -- which Ralph refuses to reveal in his annual
reports. (His lame reply is that people who are interested can get the information by getting every year's annual report and
doing the math. So much for openness.)
The book "Abuse of Trust" carefully documents the money amassed and stocks played for 6 major groups, including Public
Citizen, Inc. and the Center for the Study of Responsive Law, his two largest groups. Public Citizen, Inc., in particular,
amassed money so quickly that it bought an old FBI building for $1.25 million IN CASH in 1980, only its eighth year of
existence.
One reason he may hide his ample cash reserves -- besides the fact that people may not want to give him more money -- is
that he is fond of playing the stock market with that green. (He also uses surpluses from his most flush organizations, usually the
tax deductible ones, to give grants to his other groups.) Some of these transactions appear reckless for a nonprofit, "public
interest" group; others skirt the edges of insider trading and conflict of interest. Mostly, it seems that all this money was a toy
that Nader enjoyed playing with, especially as his winnings increased his power, fame and influence.
For example, the Nader is the president and treasurer of the Public Safety Research Institute. In 1970 alone, PSRI traded on
the stock market 67 times, buying and selling $750,000 worth of stock, though the organization only had $150,000 worth of
assets. These trades included a number of short sales, high risk and tricky transactions. Some worked, some lost money. In
later years, PSRI traded less, for a good reason -- the IRS audited them after 1970 and charged the organization with
"churning", excessive stock trades whose risk threatens the charitable purposes of the organization. It paid a fine and did not
contest the charge. Thereafter, PSRI continued to play the market with fewer, generally long positions. Likewise, the Safety
Systems Foundation (SSF) -- run by Nader's sister, and entirely funded by him personally -- engaged in a number of stock
and bond transactions in the late 1960s and early 1970s. It was also fined by the IRS and paid without contest.
Several of these trades were poised to take advantage of Nader's activities, by selling short the stock of companies Nader's
groups attacked, or buying stock of their competitors. In 1973, PSRI bought stock in Allied Chemical, the primary
manufacturer of airbags, on the very day before GM announced they would offer optional airbags on 1974 models. PSRI
made a 12.5% profit in 3 and a half months. In 1976, PSRI and the SSF bought stock in Goodyear just as the National
Highway Traffic Safety Administration -- then run by former top Nader aide Joan Claybrook -- announced an investigation of
the Firestone 500 series of steel-belted radials. The 2 organizations held onto the stock for 2 years until there was a recall, and
Firestone -- Goodyear's major competitor -- suffered.
In 1970, IT&T attempted to merge with the Hartford Fire Insurance Company. Nader filed a 50 page brief attacking the
merger, then SSF sold IT&T stock short. It made almost 10% on its money in 6 DAYS, then closed its position two days
before the merger was approved. When pressed by a reporter, Nader said the timing was "mere coincidence" and said he had
no control over the investment. However, his sister Laura Nader Millerson was the sole trustee of SSF throughout its
existence, and Nader was the sole contributor. |
