PUBLIC SCHOOL FOES FUNNEL A HALF MILLION BUCKS TO AL SHARPTON'S GROUP

NY Daily News - The Rev. Al Sharpton and Schools Chancellor Joel Klein stunned the education world last June when they joined forces to reform the nation's public schools.

They called their ambitious venture the Education Equality Project, and they vowed in a Washington press conference to lead a campaign to close the decades-old achievement gap between white and black students.

What Klein and Sharpton never revealed is that the National Action Network, Sharpton's organization, immediately received a $500,000 donation for its involvement in the new effort.

The huge infusion of cash - equal to more than a year's payroll for Sharpton's entire organization - was quietly provided by Plainfield Asset Management, a Connecticut-based hedge fund, where former Chancellor Harold Levy is a managing director.

The money came at a critical moment for the National Action Network. Sharpton was then settling a long-running IRS investigation of his organization. As part of that settlement, he agreed in July to pay $1 million in back taxes and penalties both he personally and his organization owed the government.

The $500,000 from the Connecticut firm did not go directly to National Action Network. Levy funneled the cash to another nonprofit, Education Reform Now, which allowed his company to claim the donation as a charitable tax deduction.

The money was then transferred in several payments to Sharpton's group, which does not have tax-deductible status because it is a lobbying organization.

Sharpton and Levy confirmed the contribution. . .

Levy says his firm came up with the idea to make the contribution, and neither Klein nor Bloomberg asked him to aid Sharpton.

At the time, Plainfield Asset Management, a major investor in gaming operations, was pressing city and state officials for approval of two deals worth hundreds of millions of dollars annually.