Daschle withdraws his name from nomination

Citing the distractions that followed revelations about his failure to fully pay his taxes, Tom Daschle today withdrew as President Obama’s nominee for health and human services secretary.

The announcement followed the withdrawal of another Obama nominee earlier in the day. Nancy Killefer, nominee for chief performance officer, also withdrew, citing earlier tax problems.

Yet taxes weren’t Daschle’s only problem. He was also dogged by his connections to EduCap, a nonprofit group that specializes in student loans.

EduCap has been in the news, and apparently under investigation, since the Washington Post wrote about its lavish spending in 2007.

The organization has, over the years, melded the tax advantages of a nonprofit status with the high finance of a profitable business. According to tax returns for 2006 (the last publicly available), founder and chair Catherine B. Reynolds received a salary and benefits package exceeding $1 million. Her expense account totalled an additional $136,000.

Also in 2006, EduCap provided an $8 million grant to the American Academy of Achievement, which is headed by Wayne Reynolds, husband of Catherine Reynolds, who is vice chair of the organization. (A photograph of the 2005 Academy of Achievement awards shows her seated between Bill Clinton and Bono.)

The nonprofit also owned a private jet, which it sold after the Washington Post revelations. The buyer was Avenue Capital Management II LP, an affiliate of Avenue Capital Group, founded by hedge funder Marc Lasry.

Lasry is a big contributor to the Democratic party. Like the Catherine B. Reynolds Foundation, he was also a major donor to the Clinton Foundation.

One of EduCap’s lobbying firms was Alston & Bird, where Daschle has served as a senior adviser.

The New York Times reported Sunday that the Senate Finance Committee was trying to determine whether trips by Daschle to the Bahamas and the Middle East - paid for by EduCap - should have been reported on Daschle’s tax returns.

The same committee began an “>investigation of EduCap in 2007, requesting tax filings and other financial information. It has not publicly released any findings of the examination.

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