Rep. Kelly Wolf, R-Kenai, has begun an investigation into the finances of the Kenai River Sportfishing Association, one of the area's most visible and influential nonprofit organizations.
Wolf said he is acting on behalf of constituents who are concerned about a number of issues related to the management of KRSA, including the group's use of funds from its lucrative Kenai River Classic fishing tournament, which raises in excess of $1 million annually.
Wolf said Wednesday he has asked the Alaska Department of Revenue to look into the group, and said he believes there is merit to the claim that the group is abusing its nonprofit status by using funds earmarked for habitat restoration and education purposes for political means.
"Nearly 60 individuals have asked me to look into this," Wolf said.
Wolf said he's been in contact with investigators at the Department of Revenue because he believes KRSA has failed to fulfill its gaming permit requirements with the state. According to state law, anyone who operates a fishing derby must have a gaming license to do so.
Gary Dodson, chief of investigations with the Department of Revenue's Gaming Unit, said Friday he could not confirm nor deny whether an investigation was taking place. However, he did say KRSA did not file for a permit in 2003. He said KRSA also has not filed for a derby permit for this year's Classic.
"We don't know why, but they didn't in '03 and they haven't in '04," Dodson said.
Dodson said KRSA did have a gaming license for the Classic in 1999, 2000, '01 and '02, and that the organization does have a permit to operate pull tabs.
For Wolf, the gaming license is just the tip of the iceberg. He also has a problem with KRSA's lobbying efforts on behalf of sport fishers. He believes that as a nonprofit organization, KRSA has overstepped the "education" portion of its purpose by sending organization employees to Alaska Board of Fisheries meetings to lobby on fish allocation issues, something he believes may be in conflict with the group's nonprofit status.
"Travel to Juneau and the Board of Fish raises issues," Wolf said, pointing to the fact that in 2002, KRSA's then-Executive Director Brett Huber was actively involved in Board of Fisheries discussions that led to regulation changes on the Kenai River.
"That is a political body," he said.
According to IRS regulations, nonprofits may "not attempt to influence legislation as a substantial part of its activities."
Wolf said he believes the fisheries regulation process in Alaska is inherently political, and KRSA has been acting more as a political body than as a force for habitat restoration and education, the group's stated purpose.
However, as a nonprofit, KRSA is permitted to spend some of its funds to participate in the public process and has never attempted to hide its involvement in the Board of Fisheries process. Its bylaws clearly state that one of its objectives is to work "as a liaison between KRSA members and the Alaska Board of Fisheries, the Alaska Department of Fish and Game, Alaska State Parks, Kenai River Special Management Area Board, the state Legislature and other agencies and organizations."
On Wednesday, KRSA Executive Director Ricky Gease responded to Wolf's charges. He said Wolf is free to conduct any investigations he feels are warranted, but Gease believes they're without merit.
"As a representative, he can do what he wants," Gease said.
Gease said he believes KRSA has acted properly since its incorporation as a nonprofit in 1984.
"Everything I've seen so far follows our guidelines," Gease said, noting the group regularly conducts annual audits and has never run into any trouble with its internal auditors or the IRS.
Another issue for Wolf is KRSA's failure to immediately return all its assets to Kenai River projects. Although KRSA has dedicated more than $2 million in Classic funds directly to riverbank restoration and public education programs, Wolf has a problem with the fact that the group also maintains a large endowment fund containing more than $1.7 million.
Wolf said that flies directly in the face of state law, which states proceeds from gaming operations can't be held more than 12 months without permission from the state.
"The issue here is money can't be carried over unless you ask for an exemption, and they can't be used for lobbying purposes," Wolf said.
However, Gease said the practice of maintaining an endowment fund is common in the world of nonprofits and is essential to continuing KRSA's mission in the future.
"It's what managers of nonprofits do," Gease said. "It's just prudent strategy."
As to the issue of the group's gaming permit, KRSA President Ron Rainey said Friday that the reason the group didn't get a permit last year was that since the Classic is an invitation-only event, and not a public fishing derby, Huber didn't believe a gaming permit was needed.
"Brett was in contact with the Department of Revenue and he was told we did not need a gaming permit," Rainey said.
He said if it turns out KRSA does indeed need to file for a permit, the group will certainly do so.
"We'll go ahead and cross all the T's and dot the I's," Rainey said. "There was never any intentional shorting of permits."
Wolf said he's also been contacted by constituents who believe KRSA's actions are in violation of guidelines set out by Alaska State Parks in its comprehensive management plan for the Kenai River.
One of those constituents, John Nelson of Soldotna, approached the Kenai River Special Management Area Advisory Board to ask that it look into KRSA. According to the management plan, any group which operates a derby on the river must return all funds raised to habitat programs.
"Is KRSA in compliance with that recommendation and if so, where are the figures published?" Nelson asked the board.
State Parks area superintendent Chris Degernes told Nelson the stipulation is not a law, and that if the Department of Revenue allows the event to take place, there's not a lot State Parks can do about it.
"If Revenue permitted the activity, it would be very difficult for Parks to say no," Degernes told Nelson.
KRSMA board member Ted Wellman agreed with Nelson. He said regardless of whether the recommendation is law, he believes there's something fishy about using Classic funds for any purposes other than habitat or education and the management plan should be taken more seriously.
"It's more than just a recommendation, in my view, it's the plan," Wellman said.
Allegations that KRSA has used Classic monies to improperly lobby on behalf of fisheries allocation issues are nothing new. For years, area residents have questioned publicly whether the group has a right to spend money raised from the event to try and influence state fisheries issues. What is new, however, is the fact that a state representative has decided to take the group to task.
It's not something Wolf said he takes lightly. In addition to being one of the most visible players in the area's fishing scene, KRSA also has the support of such influential figures as Sen. Ted Stevens and Gov. Frank Murkowski, who served as honorary co-hosts of last year's 10th annual event. Wolf said he's not out to ruin the Classic and intends no disrespect to either Stevens, Murkowski or any of the many U.S. senators who've participated in the event through the years.
"The Classic itself is an extremely valuable resource in itself to the Kenai River," Wolf said. "U.S. senators travel to the Kenai Peninsula to see the world famous Kenai River, take part in an event that could be a wonderful community opportunity."
However, as long as KRSA continues to use its funds for things other than education and habitat, Wolf said it must be held accountable. He said he sees no solution to the issue except to have the group's entire board of directors resign and be replaced with new officers.
"I'd ask for the immediate resignation of every member on the KRSA board," Wolf said.
He said he blames the people running the organization, not the organization itself.
"The entity cannot be held responsible, but the people can," he said.
Wolf believes his constituents want to see an honest accounting of KRSA's funds and would like the group to stop using the river to fund its political dealings.
"The people of the Kenai Peninsula have long questioned what is taking place with the dollars," he said.
Not everyone, however, believes Wolf's motivations are strictly constituent driven. As the founder and former head of the Youth Restoration Corps, a group that utilizes young people to conduct riverbank restoration projects, Wolf has had dealings with KRSA while he was still in the private sector. Rainey said Friday that YRC was denied a grant in the past because of insufficient information supplied in the group's application.
"They wouldn't provide us with any details," Rainey said.
He said KRSA would be more than happy to help fund YRC if the group presented an acceptable proposal.
"We would love to work with YRC," he said.
Wolf acknowledged Friday that YRC was denied a grant by KRSA in the past, but said that has nothing to do with his investigation.
"This is not by any means a 'tit for tat,'" Wolf said. "This is something my constituents asked me for."
Wolf said he believes the only solution to what he characterized as "an Enron of Alaska," is for the KRSA board to step aside and allow a new group of people to step in so the Classic can continue funding Kenai River habitat and education programs without being a polarizing group in his district.
"I believe very strongly that this board of directors needs to take the responsible action for the betterment of the community," he said.
As long as the KRSA board continues to act as a political body, he said he believes there will be a "cloud hanging over the Kenai."
"We can't leave one individual on the board," Wolf said. "It has to be a new day. If nothing else, let's do it for our kids."
Rainey doesn't see the situation that way. He said he believes KRSA has done nothing but benefit the community and looks forward to continuing the group's mission into the future.
"We want to make sure habitat and fish are protected for our grandchildren and our grandchildren's grandchildren," he said.
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