Audit Of Sierra Club Foundation Sought -- Money To Aid Sheepherders Allegedly Misused

In a case that threatens to sully the name of the nation's most venerable environmental group, the attorney general of New Mexico has demanded an independent audit of money given to the Sierra Club Foundation more than 20 years ago by a wealthy donor who intended the money to benefit a group of poor Mexican-American sheepherders.

The charitable foundation, which raises money for the Sierra Club and other environmental groups, faces allegations that it diverted a $100,000 donation through a series of accounting swaps before using it to help buy the property in San Francisco that now houses the Sierra Club's national headquarters.

Among other questions, the attorney general wants to know why the foundation never reported the $100,000 gift in its tax returns for 1970, the year it received the money.

Foundation officials say the allegations are without merit, but they admit the charges hurt.

"It's as if someone is accusing the pastor of a church of beating his wife," said Stephen Stevick, executive director of the Sierra Club Foundation.

The dispute - being played out in courts in California and New Mexico - has pitted old friends against one another and renewed suspicions about environmentalists' commitment to minorities.

Foundation officials maintain they are the target of a political vendetta by a powerful and vengeful donor. They contend their position is bolstered by a recent declaration from the California attorney general's office that "the foundation accounting of the . . . gift is consistent with the restrictions placed on it."

However, the New Mexico attorney general's office said the California statement would have little bearing on its suit against the foundation, which will proceed no matter what happens in California. Those questioning how the money was handled - the original donor, the New Mexico attorney general's office and Hispanic groups - say they are shocked by the foundation's refusal to answer questions.

"The Sierra Club (Foundation) is spending well in excess of the original gift amount to avoid an accounting," said Gene Gallegos, an attorney representing the sheepherders, whom the donor intended to benefit from his gift. "What they're doing here is taking poor people who can't afford to litigate and they're making them spend all this time and money and trying to wear them down."

Gallegos said he believed the original gift would be worth well over $1 million today.

The New Mexico attorney general's interest in the case was set off by a lawsuit filed three years ago in San Francisco federal court by Ray Graham, an Albuquerque, N.M., developer and Firestone heir. Graham contends he gave the foundation Firestone stock worth about $100,000 in 1970 for a fund that was to buy grazing land in northern New Mexico for the benefit of a nonprofit cooperative of Hispanic sheepherders.

The fund had been established with an earlier grant from the wealthy heir of a mining family, who had contacted Graham about the project. From time to time over the next 10 years, Graham heard from Brant Calkin, the administrator of the fund, about efforts - all unsuccessful - to find an appropriate parcel. In 1980, Graham said, Calkin asked Graham for permission to transfer his $100,000 gift temporarily to an unrestricted fund at the Sierra Club Foundation to help with a redwood project. Graham gave his consent but says in court documents he believed the foundation would keep searching for grazing land.

Foundation officials are having none of that story. They say Graham filed suit over the $100,000 as a way of gaining leverage over the foundation in an unrelated boundary dispute that arose in 1989 over property in Albuquerque. There were never any specific restrictions on Graham's gift, they say.

"This was not a project to go out and buy pasture for somebody," said Calkin, a longtime environmentalist who was national president of the Sierra Club in the mid-1970s and is now working with the Southern Utah Wilderness Alliance.

The original intent of the fund, Calkin said, was to buy land that would serve a number of purposes, including grazing, recreation and wildlife use. The project failed because he was never able to find the right piece of property, he said.

When the project failed, Graham's donation - with his permission - "went into our general operations and his gift disappeared," Stevick says.

Calkin was so upset over the suit's allegations of fraud that he countersued Graham for defamation and libel. That suit was dismissed but may be renewed, he said.