Tuesday, July 30, 2019

California sues military support charity for private inurement, private benefit, misleading donors, and campaign intervention

Last week, California filed a 25 page complaint against Move America Forward, a California based charity, accusing the charity of engaging in activities that would amount to private inurement, private benefit, improper campaign activities and violation of state laws relating to charitable solicitation.  Here is an excerpt from the AG's office:  

In the lawsuit, Attorney General Becerra argues that charity directors Salvatore Russo and Shawn Callahan operated separate for-profit entities that charged fees for services provided to Move America Forward and did not comply with California’s Corporations Code guidelines for self-dealing transactions. Russo’s companies were paid an estimated $1,818,000 as a result of these transactions. The complaint further alleges that the nonprofit also invaded the privacy of injured veterans by using their names and stories to solicit donations without their permission. Move America Forward also plagiarized images, quotes, and information from other organizations to mislead donors and falsely inflate its effectiveness in executing its mission. Additionally, Move America Forward improperly shared its resources by providing free office space for the political action committees Move America Forward PAC and the Tea Party Express. The charity also used its charitable assets to support two political campaigns endorsed by those political action committees. Under United States Treasury rules, charities are prohibited from candidate electioneering, and their lobbying capabilities are strictly limited.  The lawsuit seeks the removal of defendants Russo and Callahan as directors of Move America Forward for abusing their authority. It also seeks to ban the defendants from operating charities and from soliciting charitable donations in California. The Attorney General’s Office will pursue further penalties.

Move America Forward, which operates to support the military on foreign deployments responded with its own strongly worded presser:

The attacks on Move America Forward began when we criticized Illinois Senator Dick Durbin for comparing US troops in Iraq to Nazi concentration camp and Soviet gulag guards, an outrageous statement.  Instead of just apologizing, Senator Durbin, joined by several other Democrats, wrote a letter to the IRS demanding a tax audit.  MAF was then subject to two IRS audits, which we passed with flying colors.  But the assault on Move America Forward and its founders has continued in the left-wing press, whose articles spurred on the investigation by left-wing Attorney General Becerra.  AG Becerra then implied that this is a recent action cracking down on military charities, but the truth is that this harassment had been going on for five years.  Despite pointing out, item by item, the inaccuracies in the reports, MAF has been subject to almost 5 years of harassment in the guise of investigations and discovery, wasting our time and resources.  All of the accusations have been TOTALLY FALSE and misrepresent the truth. . . .Now, the AG has resorted to a politically motivated and highly negative public relations campaign to demean and destroy an organization that has sent over 450 tons of care packages to the troops in harm’s way throughout the world and into the war zones of Iraq and Afghanistan. We have invited the AG to come to our office and review all of the relevant documents, much like the IRS did to give us a clean bill of health, but they have refused.

Darryll K. Jones

 

https://lawprofessors.typepad.com/nonprofit/2019/07/california-sues-military-support-charity-of-private-inurement-private-benefit-misleading-donors-and-.html

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