Friday, February 22, 2013

When does Improper Political Activity Become a Crime?

When does improper campaign intervention become a crime?  At the least, there has to be an instance of campaign intervention.  But is that all?  According to a federal information to which the defendent is set to plead guilty, the answer is "yes" surprisingly.  A short but interesting story in yesterday's Wapo describes a federal information in which the crime is hard to find.  The crime, acccording to the indictment, is that a nonprofit insider in DC used nonprofit money to fund an inauguration party and, in doing so, "interfered with the proper administration of the tax laws."  The indictment states that the insider knowingly prepared fraudulent documents to obtain $110,000 to support a "political group" that was not an eligible recipient of the nonprofit's funds and, in doing so, criminally interfered with the operation of the Internal Revenue Laws.  The criminal interference, according to the brief information stems from the allegation that the insider (1) requested her chief of staff to prepare a grant request for the money, but to list the recipient as someone other than the Young Democrats, the organization hosting the Inauguration party, out of fear that a political organization was an ineligible recipient, (2) knew at the time of the grant application that the nonprofit's accountants would prepare a 990, and (3) knew, at the time of the grant application, that the 990 would be incorrect because the actual [political] use of the funds would not have been disclosed.  According to the report, the insider intends to plead guilty.  I am just not so sure about the wisdom of doing so, unless there is a deal for some sort of diversion.  It sounds like the U.S. Attorney is  really stretching to find a criminal allegation in this case.  First, the money was not going to be used to intervene in a campaign -- it was to be used for an inauguration party, the campaign having already been won.  Second, the allegation is built on too many suppositions -- the insider filed the grant application knowing that a 990 would later be filed, the acountants or auditors would prepare a 990 presumably asking no questions about ambiguous expenditures, and then eventually the 990 would in fact be filed incorrectly.  This seems a house of cards as far as criminal liability goes -- at least under the charge of interfering with the proper administration of the internal revenue laws.  If it were to stand, it seems to me, nearly all improper campaign interventions ought to constitute a crime as opposed to a violation of the condition of tax exemption.  The bottom cards are the least stable, by the way, since an inauguration party might not be a good use of charitable funds but hardly constitutes improper campaign intervention.  Another rickety card in this house is the assumption that the Young Democrats are necessarily an improper recipient, of a charitable grant (even if the insider was concerned that they might be).  What if they were conducting a voter registration drive or just . . . having a party to celebrate another successful violence-free political process?  I just wonder if the poor defendant in this case has received decent tax advice or, instead just simply hired some top flight but no less tax exemption-insensitive litigators.  There should be a motion to dismiss and, failing that, perhaps a trial, nevermind a guilty plea!  But then again, nobody asked me. 

dkj

http://lawprofessors.typepad.com/nonprofit/2013/02/when-does-improper-political-activity-become-a-crime-.html

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