Money Rehab with Nicole Lapin - Dark Money Has Infiltrated American Campuses - Here's How To Make Sure Your Money Is Clean

Episode Date: October 16, 2023

Your money is a vote; but it's not just where you spend it that matters, it's also where it comes from. Nicole knows people who have taken jobs at companies with iffy ethics and investments from nefarious sources. Do the ends justify the means? Nicole explores that question with Dr. Charles Small, a terrorism finance expert who founded the Institute for the Study of Global Antisemitism and Policy. Dr. Small illuminates the money trail of funds to American universities from Qatar— a country known for supporting terror groups, including Hamas, the group responsible for the attack in Israel last week. Then, Nicole is joined by Peter Rahbar, a workplace legal expert and lawyer, on what entrepreneurs should do to make sure their investments don't come with unethical strings attached.

I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start, or even too complicated, if, say, you want to put your summer home in Maine on Airbnb, but you live full-time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you.

I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no

maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits

apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Your dollar is a vote. If you've been a money rehab listener for a while now, this isn't a new concept to you. It's the idea that if you spend money on something, you're enabling that company to continue its operations. And so you're endorsing its business. We talked about this following George Floyd's murder and how supporting Black-owned businesses put money into the hands of the Black community and supported the success of those communities.

And on the flip side, if you shop with companies who have historically denied opportunities to the BIPOC communities, you're supporting the success of that business and their ideals. So giving money is a vote. But here's something we haven't talked about yet. Taking money is also a vote. It's a question I've had to answer for myself. I got the opportunity to partner with a brand, and I'll just be honest and say it. It was Robinhood, the trading app. Robinhood wanted to pay me a lot of money for their endorsement, but I was really skeptical about that company's ethics. I'd heard compelling research that Robinhood is built to incentivize users

to make really risky bets that hurts users and benefits Robinhood. So I said no. I would not take their money because I didn't want to introduce Robinhood to you. I didn't feel good about it. This is something I've watched my friends struggle with many times. I've had friends take money from the Koch family, for example, who has a large share of the petroleum industry and has invested a lot of money into opposing climate change legislation. I've known friends who are W2 employees and don't agree with their company's stance on questions like data privacy. I've also known entrepreneurs who are W2 employees and don't agree with their company's stance on questions like data privacy.

I've also known entrepreneurs who have taken investments from Qatar. Qatar, being the country in the Middle East with a long history of supporting terror, including Hamas, the terrorist group responsible for the attack in Israel last week. In fact, one of the leaders of Hamas lives in Doha, the capital of Qatar. These are not, though, experiences unique to the people I know, but a question many people and institutions are grappling with worldwide. I recently spoke about this with Dr. Charles Small, who founded ISGAP, the Institute for the Study of Global Antisemitism and Policy with Elie Wiesel. Here's Dr. Small.

It's an issue that's happened right under the noses, I think, of American authorities for decades. And essentially, money has been coming from Qatar, and they basically fund using soft power activities in the West, namely in universities, in the media, they're investing. We've been doing research into this issue for now for about eight years. In the last two years, we were joined by Yehuda Barlev, who is a leading forensic accountant and expert in terror financing. And we've been able to identify nearly $1 trillion in assets that is being used to put funds into entities, countries around the world from North America, South America, Africa, certainly the Middle East and Europe. And they're investing money into major corporations like banks, car companies, Harrods. They own a large part of Heathrow Airport. Their investments are really around the world in legitimate major companies. And they're also

giving money to universities around the world and certainly in the United States. We've been able to construct a chart, a web of how the funds are coming from Qatar to various intermediaries into universities. So we've been able to trace a significant amount of the funds, but I'm sure that we've only been able to trace and identify, you know, probably a small portion of the funds. But we've been able to identify, you know, tens of billions of dollars going into the universities. The term soft power was coined during the Cold War by a political scientist, Joseph Nye Jr., who defined it as a country's ability to influence others without resorting to coercive pressure. Coercive pressure would be classified as hard power, and examples of hard power are

military actions and financial sanctions. Soft power, by contrast, is exerted through strengthening partnerships and fostering goodwill via financial donations or cultural exchanges. The way I think about it, though, when it comes to finances is soft power is giving money, hard power is taking it away. You might wonder whether soft power is too, well, soft to work. Here's what Dr. Small said about that. So we run a program at Oxford University in the summer, and we run a program where we train professors on issues of anti-Semitism. And we had a one-day dedicated to the use of soft power in American universities. And at the end of this one-day program with all these experts there, one of the students asked the same question.

They said, can the funds really influence curriculum and education in the United States when grants are given to universities. And I told the student, you know, we run a program, it costs about $350,000 for the Summer Institute at Oxford University. And it's a very intensive training program for professors. And I asked the student, you know, did the last few weeks at Oxford University influence your understanding of anti-Semitism and the use of soft power? And he said, yes, it was amazing, you know, amazing summer institute, and I learned so much. So I said, could you imagine a few weeks at Oxford with $350,000 has influenced your life? Imagine if billions and billions of dollars were being

put into the education on issues like anti-Semitism and terror financing. What would be the impact? So, of course, funding universities is an expression of soft power by governments, by countries and institutions, and it has an impact. And we can even take, you know, a small step back for a second, and I can kind of summarize it in a very simple example. And in terms of anti-Semitism, so I started our institute with Professor Elie Wiesel, and Elie Wiesel always taught us that anti-Semitism is not a parochial Jewish problem or a problem of Israel. It's a problem of humanity. And once this vulgar form of hatred is unleashed, it knows no boundaries. And it will start attacking other members of our society and

community and institutions. And it knows no bounds. And I think we're beginning to witness this on the streets of America. So the concern here is that soft power can turn into a quid pro quo arrangement. If a company supports Hamas and is investing in airports, can that translate into looser security in those airports? A lot of Dr. Small's research is on universities, and I want to be really clear here. Universities are places for people to exchange with different ideas and cultures. It's important to have diverse representation on campuses. and cultures. It's important to have diverse representation on campuses. Yes, Qatar is a Muslim-majority country, but that's not what makes Dr. Small concerned about these donations. The concern is that Qatar is a country that supports terrorism. In other words, the issue

isn't that Qatar supports Muslims. In fact, part of the issue is that they don't. It's a group of people that are speaking in the name of Islam and Muslims. And I would submit to you that the greatest victim of their hatred are Muslims. They use anti-Semitism. They use the attack on the West, but they don't support the rights of Muslim women. They are opposed to moderate Muslims who just want to live in peace and get on with their lives, who are not as extreme as the Brotherhood. So I think it does a disservice for the politically correct people in the West to give them a pass. It's a paternalistic racism. It's a racism of low expectations. And if we truly care about Muslims, we have to support Muslims who are brave and brilliant, who are standing up for decency in the face of extremism.

And they're risking their lives. Some of us in the West may, I don't know, maybe I risk tenure, I risk being socially acceptable, but I can deal with it. But Muslims standing up to this hatred are risking their lives. And I think we need to support them. As Dr. Small mentioned, his team was able to uncover $1 trillion in undisclosed assets. And the Department of Education is now starting to crack down on finding the schools that don't disclose who their big donors are. Dr. Small breaks down the money trail. Texas A&M, they received $1.5 billion in undocumented money. So now I think Texas A&M

will be in trouble moving forward because they didn't disclose the funds that they received as they are obligated by law. For example, Stanford University just paid a small fine of $2 million because they were receiving, 11 professors received money from China, and it was not documented. And Stanford was just fined $1.9 million. It's a slap on the wrist. So according to US law, this was law that was passed during the time of Nazism. There was a fear that universities were going to start to become pro-Nazi. So there was a law that was created in 1943 that universities that receive money from foreign sources that exceeds $250,000 are obligated to report it

to the Department of Education and the IRS. And they have to disclose the amount and the source of the country and which individual or foundation. So universities are not disclosing. So in our research, when we found the $3 billion and it led to the federal investigation, Yale University, for example, there was some sort of clerical error and they didn't report for four years. Harvard University, as an example, they would only report the total of how much they received from foreign sources,

but they wouldn't divulge the source country or the individual or foundations that gave them money, and they still don't. They refuse. So during the federal investigation, the government warned the universities that they had to disclose, and then many universities suddenly, you know, a lot of disclosure took place, but still some universities refused to do it. So in our research with our forensic accountants, we've uncovered many contracts that have not been disclosed. So we can actually trace the source to the university or to the professors or to the institute research centers at different universities. So we've traced many examples, hundreds of examples of

these illegal activities. And with our meager resources, if we can find hundreds of such contracts, I'm sure if a proper federal investigation would take place, that there could be a lot more uncovered. Here lies the ethical dilemma. Hold on to your wallets. Money Rehab will be right back. I love hosting on Airbnb. It's a great way to bring in some extra cash, but I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or

something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high-quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host,

so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees.

If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bank Corp. Bank N.A. or Stride Bank N.A. Members FDIC.

SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. And now for some more money rehab. Let's go back to my friend, a Jewish entrepreneur who accepted an investment from Qatar. And truly, that was what the cap table said. Qatar. It's not like he said yes without thinking about it. The truth is, it's really hard to fundraise, especially now.

And in this particular economic environment where it's harder to borrow money, it also becomes harder to fundraise. And so the issue becomes, I need this money to do something great in the world. And if I don't have this money, I can't do that great thing. If my friend didn't take the money, someone else would have. If my friend didn't take the money, that would be one less Jewish entrepreneur in the world. Do the ends justify the means? Here's Dr. Smulligan.

So I think in general, you know, in a free democratic free market system, I think there has to be some level of checks and balances and social responsibility. And I don't think university presidents or directors of development office at our best universities would take money from the Ku Klux Klan or organizations in the United States that call for some sort of violent uprising or the subjugation of women or the killing of African Americans. And I think that the heads of universities need to stop taking money from organizations that call for the extermination of Jews, that explicitly calls for it. And they have to do their due diligence. They have to know where their funds are coming from and stand up for what the best values of our society are.

So that's number one. Number two, I think if universities are not acting responsible, I would say it's incumbent upon donors and funders and major foundations in this country to stop giving money to universities that take resources and funds from countries and foundations that are calling for the killing of members of our society and members of university communities. It's outrageous. So I think there has to be social responsibility. And then on the other hand, I think governments, the United States of America should do a federal investigation into what's going on in universities and where these resources are coming from and to understand its impact that it has on our curriculum, on our syllabi, and our future generations of where,

you know, our young people learn to be responsible citizens in universities. But I think that from a moral and ethical perspective, everything we do and everything we don't do has moral and ethical implications. All of our actions, all of our inactions has an impact. And if we want to lead, you know, meaningful lives, if we want to have a society with a sense of social justice, we need to act ethically. And taking resources from nefarious sources can't lead to good things. And we're not always in positions that make these decisions easy and sometimes the results are difficult.

But I think if we lead ethical lives, we'll get to better places. Sometimes a short-term gain may not be a long-term benefit. When it comes to Qatar, or a group that funds violence and hate, no one should be taking that money. But there are some donors that sit squarely in a gray area. If an entrepreneur is raising money for a business that cleans up beaches, let's say, should they not take money from a company that manufactures plastic? If you're employed at a company, does your company share all of your same values? I think in those cases, it comes down to a simple question. Is the good that you

can do with the money more powerful than the bad that created it? If the answer is yes, it's a net positive. I think the best way to move forward is to protect yourself from any question of a quid pro quo. So to close, I wanted to give you some tips, plural, that you can take straight to the bank about building that protection for yourself. And they come from a conversation I had with legal expert Peter Raber. Here's our chat. So Peter, if an institution takes money from a donor or an investor, is there something they can do or add contractually that protects them from any expectation of giving influence or decision-making power in exchange for that money? They better be doing that. I mean,

that's 100% something that should be done because a lot of people who give money or invest expect to have that level of influence depending on if assuming they're making a large enough donation or investment, they're going to expect to have that influence. So if you're a donor, you know, let's say you're giving money to a university, you're going to specify how you want that to be used. And if it's not used that way, you want rights to either get the money back, or you'll have a nice basis to sue the university and say, I gave money to be used in this manner

and you did not use it in this manner. Therefore, you violated our agreement. Same goes for a corporate setting. If you have someone investing in your company, you should be very clear about what their role is and what their role isn't and what their rights are and aren't. Yeah, there's no free money.

Is there a clause, like just double clicking on entrepreneurs who are raising money? Is there an easy clause or language or something to put up guardrails that can protect you when taking on that money? Yeah, absolutely. I mean, there should be language in there that says that, you know, they don't have any power, you know, over the management of the company and that the management of the company is within the full discretion of the company. It's not very complicated. It's like three sentences and they have no voting power and they have no other powers over the decisions of the company. of the company. And look, if they're someone, an investor who wants to have those powers, then they should be really sure to get that grant of power in the agreement. They would want that.

I think the default under most states laws and like Delaware law, where most companies are located is that the company would have those powers unless it says otherwise. And especially if they have no voting rights or board seat or things like that, there's a lot of factors that would work against them in trying to enforce something like that against the company. And if you're taking the money, are there any red flags you should look out for in language that that donor or investor may provide you? Well, everything should raise a red flag because if you're raising the money, then you should have control of the agreements. You should have a standard agreement that you're using for all your investors.

And so if you have an investor who wants to change everything about that agreement or change five items on it, then you should be paying really close attention to what those items are. So I would say just at a very high level, like any change they request should be taken very seriously with very close examination. But if they're looking for voting rights, if they're looking for a board seat, if they're looking for regular updates, something as innocent as like a, a monthly update being required or a weekly update or something or quarterly, even I work with a lot of companies who are justifiably reluctant to agree to those things because, you know, I mean, if you're raising money, if you're a young company, you don't have a lot of time to do that kind of stuff. And it's a very easy wire to trip. And then those sessions could become much broader sessions and maybe give people a sense of entitlement that they shouldn't have over operations.

So that kind of thing is maybe innocent on the surface, but can have deeper ramifications for sure. If they want reporting on employee actions or access to like employees or things like that, you know, that's, those are terms you should really not accept at all. Is there anything we're missing here about how taking money is also a vote? Like you vote with your money by giving it and you also vote by taking it and who you're taking it from. So we're really trying to zone in on terror funding inadvertently or explicitly. Yeah. Well, you'd want to have a real strong focus on your vetting process and background checks, having standardized background checks

for your investors, asking for references, other companies they've invested in, paying close attention to what banks they're using, things like that, or also what lawyers they're using. Those are, you know, important things. Like, you know, if you're taking on an investor and all of a sudden they have a lawyer in Panama, let's say where, you know, a lot of nefarious activity has gone through that country, you know, you may want to take a second look and say, well, you know, look, do you have a U.S. based entity and U.S. based lawyers we could deal with? So the diligence process is really, really important. And I think part of that is also seeing who they've worked with before and maybe having

short talks with those founders or CEOs and what their experience were with these investors. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you.

No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.