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Monday, March 13, 1995 - Page updated at 12:00 AM

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Debt, Fraud Allegations Riddle Farrakhan's Empire -- Religious Leader Lives Lavishly While Firms Flounder

Chicago Tribune

CHICAGO - From the charity of some of the United States' poorest citizens, Louis Farrakhan has built an empire of nonprofit religious corporations and profit-making firms that stretches from Beverly Hills, Calif., to Bronwood, Ga., and centers on Chicago's South Side.

But in its business practices, the Nation of Islam and companies affiliated with it contradict the minister's bright message of integrity and independence, and belie Farrakhan's vow that he will lead African Americans to economic power.

Nation-affiliated companies are riddled with debt, failure and allegations of fraud, while Farrakhan, some relatives and top aides live lavishly.

Indeed, while Farrakhan accuses whites of exploiting blacks, his business practices show that he ends up exploiting the very people he says he wants to lead out of poverty.

Farrakhan, his aides and family did not respond to more than a dozen requests for interviews and information. But land and court documents, government contracts, corporate records and interviews show:

-- Federal tax laws forbid the use of church-owned assets to enrich private companies owned by church officials, but the assets and leadership of the Nation of Islam are in some cases thoroughly intermingled with business ventures run by its officers.

-- Nation-linked companies and properties are burdened with tax delinquencies and unsatisfied court judgments. The Internal Revenue Service has filed $354,588 in liens against a Washington-based security company. It is also trying to collect $93,000 in taxes from a soap company, which owes another $15,000 to creditors - debts it said in court filings it could not pay. The Chicago building Farrakhan calls his Sales and Office Building owes more than $1 million in property taxes. Three other Chicago buildings carry an additional $50,000 in unpaid property taxes.

-- Although Farrakhan claims that he personally owns nothing, records show that he and his wife own Chicago property and cars.

Millions of dollars flow into the Nation and its associated firms each year from donations, rent, purchases, speaking fees and government grants, although no one outside Farrakhan's inner circle can say exactly how much cash the Nation takes in each year, or precisely where the money goes.

Overall, the Nation controls at least five separate financial accounts and shares directors and has other ties with a half-dozen private security firms, three companies that sell soap and cosmetics, a publishing company and two clothing firms.

Related companies include a coterie of bean pie shops that blast Farrakhan tapes into city streets from loudspeakers, and a clinic that sells an unlicensed drug which it calls an AIDS cure.

And despite anti-government rhetoric, two of the most lucrative Nation-affiliated ventures - the security companies and the AIDS clinic - have since 1991 won federal contracts worth more than $15 million.

Despite its name, the Nation of Islam is not affiliated with orthodox Islam, whose religious leaders consider Farrakhan's tenets heretical.

Unlike mainstream Islam, the Nation teaches that white people were "grafted" into existence 7,000 years ago by a scientist who made them inherently deceptive and murderous.

The Nation's membership numbers have been kept secret under both Elijah Muhammad, its first supreme minister, and Farrakhan. Religious scholars, however, guess that there are about 20,000 followers.

Farrakhan, 61, has patterned the Nation's sprawling conglomeration of businesses and charities after those established by Elijah Muhammad, who sank millions of dollars into building businesses in the black community.

The empire began to crumble even before Elijah Muhammad's death in 1975, riven by tax debts and internal corruption, and it finally collapsed amid competing probate court claims of his heirs and ministers.

But by renewing calls to repatriate to Africa, set aside federal land as payment for the toil of slaves and create a separate, self-sufficient economy, Farrakhan taps into a rich and enduring vein of American thought: the dream of a black nation.

Everything about him, from the sheen of his silk suits to the smooth power of his customized Lincoln Town Car limousine, bespeaks affluence and power.

The businesses, however, have not fared so well.

More information is available on the News Plus area of The Seattle Times Extra. See A 2 for details.

Copyright (c) 1995 Seattle Times Company, All Rights Reserved.

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