Reporters writing about Private Nonprofit Foundation Fraud

Sacha Pfeiffer,  Boston Globe - “It’s a tax ripoff" -  4/30/17 

“Bottom line,” the tipster wrote in an e-mail, “a man pays his daughters $350,000 year to write checks to the same 6-10 nonprofits every year,” and is eligible for a charitable tax break on what he pays them. Every dollar his children receive means less money going directly to charities.

The Martin Memorial Trust’s practices are widespread in the foundation world, said Bruce R. Hopkins, a Kansas City lawyer and author of “Private Foundations: Tax Law and Compliance.”

“This kind of thing is relatively common, unfortunately, where children or friends or even the founders themselves are employees, and they’re paid a fairly high salary for doing jobs that really don’t require that much effort or time.”

“When you aggregate all these instances,” he added, “it could be a big revenue loss for the states and federal government, and a big abuse that people are taking a charitable deduction for these donations.”

Darius Tahir,  Politico - "How Washington’s favorite cancer fighter helps himself" - 4/09/2017

 "Of the nearly $59.6 million in foundation expenditures between its founding in 2010 and 2015, the most recent year for which records are available, over 70 percent have gone to Soon-Shiong-affiliated not-for-profits and for-profits, along with entities that do business with his for-profit firms."     

Carolyne Zinko, Karen de Sa’, and Cynthia Dizikes, San Francisco Chronicle -“A fashionable San Francisco charity’s ugly reality” -  12/3/16

A Chronicle examination of the public financial records of Helpers Community Inc. — known until 2015 as Helpers of the Mentally Retarded — shows the $6 million charity indeed appears to have strayed from its cause, pursuing questionable practices with scant oversight from a small board that includes its director, Bianchi, and her longtime friend.

Over the last decade, filings to the Internal Revenue Service reveal the nonprofit has done little charitable work while amassing millions of dollars in assets and donations and generously compensating Bianchi, as she travels to red-carpet galas from Beverly Hills to Manhattan, appearing alongside celebrities such as Demi Moore, Gwyneth Paltrow and Katy Perry.  

Bob Egelko, San Francisco Chronical - Vanguard chief gets prison term for fraud - 1/29/13

An East Bay man who stole $2.5 million from investors in the San Francisco nonprofit he headed while it was being driven into bankruptcy by con man Samuel "Mouli" Cohen was sentenced to three years and four months in federal prison Tuesday.

Elizabeth MacDonald, Fox Business News - Land Trust Scams on the Rise - 1/21/13

Here’s how the tax dodge works: many real estate speculators took advantage of dirt-cheap prices to buy land whose value was driven down during the recession. The property owners then donate the land to the trust -- or nonprofit – at an inflated assessment value, but can then continue to own and even make money off the land.

Landowners can wipe out up to half of their taxable income with the move. Farmers and ranchers can even try to wipe out 100% of their adjusted gross income with these conservation donations, and even erase all of their federal tax liability for the next 15 years.


Gary Snyder,  Eastern Michigan University -  "Charity Fraud Met with a Yawn

Despite empirical evidence that fraud is omnipresent within the nonprofit world, the term “fraud” is unmentionable in the same sentence as charity or nonprofit even though nonprofits had the second highest percentage of cases behind financial services[2]. The seldom-used word ‘fraud’ at nonprofit sector conferences is disquieting. Just the acknowledgement of colossal fraud would be a significant improvement in the honesty of the nonprofit world.

Nonprofits represent 5.4% of GNP, but over 11% of all occupational fraud. Fraud is on the rise---with increasing frequency and cost.[3] The raiding of the charitable coffers is at a rate approaching twice that of the for-profit sector.

The story of malfeasance has been central to recent American charity history. With no well-defined owners or overseers, there has been no interest in developing counter measures to abuse. Because of so few outside constraints, charities tend to believe that they are only accountable to themselves. This has proven to be a recipe for disaster. 

Tisha Thompson, Rick Yarborough, Matt Smith, Amy Walters, Steve Jones and Jeff Piper. News 4 Washington DC - “Behind the Bins: Former Planet Aid Employees Describe 'Cult-like' Experience

Planet Aid makes as much as $42 million a year selling those clothes, according to its financial filings submitted to the Internal Revenue Service, indicating the money goes toward feeding and educating impoverished communities in Africa.

But in a joint international investigation with Reveal at the Center for Investigative Reporting, the News4 I-Team found Planet Aid is connected to a controversial Danish organization called Tvind, also known as the Teachers Group.

Danish court records obtained by the I-Team and Reveal say the group was founded about 1970 by Mogens Amdi Petersen, who required his members to live communally, give over control of their money, their time and decisions like "the right to start a family."

Lewis B. Cullman - Private Foundations: The Trick - 9/25/03

The next time you read about a rich person donating $100 million to charity, you should be aware that this seemingly generous gift may never actually reach the institutions that need it. The chances are that the donation is being used to set up a private foundation. The gift will earn the donor a full deduction against income or estate taxes. But the little-understood trick of this form of philanthropy is that the $100 million that launched the foundation need never go to charity.

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