In 2006, with assets of $24 million, the Alliance granted $208,000 to local charities, slightly more than a quarter of what it spent on lawyers.
Arnao was paid $100,000 that year - nearly half the amount dispensed on charity, and quite a comedown from the almost $153,000 she earned in 2005.
Then again, she resigned in early June, due to the criminal investigation. Arnao was formally indicted in February 2007 on 45 counts, including fraud and obstruction of justice.
The indictment charges that Fumo and Arnao defrauded the charity and "persistently used funds and employees of Citizens Alliance for their personal and political benefit," and "caused a loss substantially in excess of $1 million."
Expenditures included such essentials as tiki torches, $100-a-gallon white paint, and 17 Oreck vacuum cleaners.
An Alliance of Citizens
When Fumo served as a commissioner of the Delaware River Port Authority, a drama in itself, he diverted $10 million of "economic development" funds to economically develop his charity. And as a ranking member of the State Senate, he obtained $17 million from Peco for Citizens Alliance.
You are the citizens behind his alliance.
Those bridge tolls and electric bills you paid allegedly went to making the lives of Fumo & Friends so much better, according to the federal indictment.
Of the 267-page indictment, the Washington Post raved: "It's a deliciously entertaining document that should be read by every political-science student in America."
It's not so delicious or entertaining when it's your money.
Is it legal for a charity to spend money on lawyers defending its director against charges of allegedly misusing that money?
Depends on the expert.
"Absolutely. A Pennsylvania statute provides for it. It's in their right to pay the legal bills for people who are being sued because of activities in connection to the charities," says Philadelphia lawyer Donald W. Kramer, an expert on nonprofit issues.
"This sounds like another misappropriation," says Marcus S. Owens, a lawyer, authority on nonprofits, and a former head of the tax-exempt division of the IRS.
"To me, there's a difference between paying for some suit that's in one's service to the organization that has been approved by the board, and another in paying legal bills due to the unilateral taking of the assets."
Joel L. Frank, one of Arnao's lawyers until August 2007, said "the board had an independent attorney validate the hiring of our firm in the matter."
Frank, who specializes in white-collar criminal defense, was paid by Citizens Alliance.
Arnao and the charity's current executive director, Christian DiCicco, didn't respond to questions, nor did other lawyers hired by the charity during the investigation.
To be fair, Citizens Alliance proved more generous in 2005, allocating $727,000 in grants. The largest gift, by far, was half a million to the Dr. Magnus Hirschfeld Fund. (The next year, Citizens Alliance gave the fund almost $167,000.)
Founded by Philadelphia Gay News publisher Mark Segal, a close Fumo friend, the fund produced the 2005 Independence Day Elton John concert, which was to have raised $1 million for local AIDs-related programs.
Organizers spent $850,000 on costs, including $167,000 for Sir Elton's private jet and $92,000 for catering.
The performer's appearance was predicated on a pledge of $1 million to his charity. Ultimately, local charities received $100,000, and Elton John's foundation appropriated an additional $200,000.
Citizens defense fund
The federal case against Fumo, Arnao and two other aides is scheduled for federal court next month. Is Citizens Alliance continuing to fund Arnao's legal bills?
"It wouldn't be appropriate to say anything about a case that's going to trial in five weeks," said Edwin J. Jacobs Jr., Arnao's chief attorney.
How much does Citizens Alliance have left in assets? How much is it donating to charitable causes? Is the nonprofit still receiving funds from the government and other sources? These are questions for the ages. DiCicco didn't respond.
If Arnao is found guilty, Citizens Alliance "would seek restoration of any assets that may have been taken," according to the tax return.
There's no mention of the legal bills.
However, when the folks at Citizens Alliance discovered that an employee stole $10,000 in 2005, as reported in the tax return, they didn't hire a defense attorney out of its funds.
They fired the employee and demanded the money be returned.
Which the employee did.
Contact staff writer Karen Heller at 215-854-2586 or kheller@phillynews.com. Read her blog at http://go.philly.com/populist.
