Activist urges bank to cut ties to N.Y. group

Wachovia is trustee for nonprofit with controversial leaders

Charlotte Observer/May 26, 2003
By Rick Rothacker

Mike Niebauer wants Charlotte's Wachovia Corp. to drop a controversial customer.

For the past few months, the New Yorker and co-chairman of a group called Save the Independence Party Voter Coalition has been writing letters to executives and board members. He came to the company's annual meeting last month, but wasn't allowed in because he owns no company stock.

Niebauer's beef?

Wachovia is the trustee for an $8.5 million tax-free bond issue for a nonprofit group called the All Stars Project Inc. The organization is a theater program for inner-city youth in New York City, but is led by two controversial figures: Lenora Fulani and Fred Newman.

Fulani, a former presidential candidate, and Newman, who has called himself a neo-Marxist, practice a type of group therapy that some liken to a cult. The Anti-Defamation League also ascribes anti-Semitic remarks to the pair.

As trustee for the All-Star Project bonds, Wachovia handles back-office chores such as sending investors their interest payments and account statements. It doesn't hold any liability if the nonprofit can't make payments.

Niebauer's interest in the group stems from Fulani and Newman's involvement in New York's Independence Party, an offshoot of Ross Perot's Reform Party. Niebauer was a former county chairman who opposed Fulani's and Newman's role in party politics.

Now he's urging Wachovia to cut ties to them.

"I want to persuade them that this is irresponsible," Niebauer says. "I hope Wachovia terminates this transaction, but I don't think they will."

In a response to Niebauer's letters, Wachovia Chief Executive Ken Thompson wrote last month that client confidentiality prevented him from discussing the company's business with the organization.

"I will assure you, however, that we have taken the information we received from you very seriously," Thompson wrote. "I also want to assure you that respect for the individual is a core value we take very seriously here at Wachovia."

A Wachovia spokeswoman declined to comment further.

In a statement, Roger Grunwald, spokesman for the All Stars Project, said Niebauer's "statements are political in nature, and as a nonprofit, philanthropic organization we are required to be nonpolitical. Therefore, we have no comment."

He also added: "The All Stars Project Inc. is widely recognized as one of the country's leading youth development efforts and is enormously proud of the work it does on behalf of inner-city youth in New York and around the nation."

Others, however, also have concerns about the project. Rick Ross, a cult expert in New Jersey, says former practitioners of Fulani and Newman's "social therapy" -- which encourages political activism to cure depression and other problems -- have described the therapy as cultlike.

"Former members were devastated by the experience," said Ross, executive director of the Ross Institute, which maintains a database of cults and controversial movements. "They compare it to brainwashing. They lost their ability to think independently."

The Anti-Defamation League, which lists anti-Semitic remarks attributed to Fulani and Newman on its Web site, has concerns about companies doing business with the All Stars Project.

"I'm worried how the organization is used and where the money goes," said Gail Gans, director of the Anti-Defamation League's Civil Rights Information Center. "If I were a shareholder in a bank, I would want due diligence done."

Niebauer says he will continue his campaign and hopes to attend next year's annual meeting.

New job with Morgan Stanley

After a stint as head of AmSouth Bank's investment services unit, Tim Jones is back in Charlotte. The former head of IJL Wachovia's private client brokerage group has a new job as head of Morgan Stanley offices in the Charlotte area and Asheville. Jones had been with Charlotte-based IJL Wachovia for 14 years, but left for the AmSouth job in Alabama shortly after Wachovia merged with First Union Corp. He said one of his tasks will be to grow market share in Charlotte and North Carolina.