"Fake Photo" Kaloogian's IRS Form 990. Calling DU tax experts!

[DinahMoeHum]

The good folks over at TPM Muckraker and DailyKos are asking for any DU tax experts to mull over
Howard Kaloogian's Move America Forward IRS Form 990 he filed in 2004:

Link:
http://www.tpmmuckraker.com/archives/000225.php

(snip)
As we mentioned yesterday, Howard Kaloogian, of Turkish Baghdad fame, founded Move America Forward. They're a nonprofit and tax exempt 501(c)3 organization - and so required to be non-partisan. There are a number of organizations that push that line, but look at Move America Forward's past work and you can see that they push it more than most.

Because they're a non-profit, Move America Forward has to file publicly accessible disclosures, called 990s, with the IRS.

We've posted their 2004 disclosure here. Take a look.
http://www.talkingpointsmemo.com/docs/moveamericaforward2004990/

We'd like to know, especially from TPMM readers who are experts on non-profits - how does it look to you?
(snip)


:donut:

[Mabus]

1. K&R for visibility

:kick:

[Lerkfish]

2. $366,000 for educational media?

I'd like to see that itemized.

[wicket]

3. No kidding!

Something smells fishy.

[MADem]

9. Did the wanker hire Neil Bush and his IGNITE outfit??? nt

[berni_mccoy]

22. It is on page 2

Here: http://www.talkingpointsmemo.com/docs/moveamericaforward2004990/?resultpage=2&

Most of the money went to the "more than one dozen ... comercials advocating support for our troops" and screenings of "Celsius 41.11" and "Americas Heart and Soul" a puke film.

If any of these comercials or movies advocate voting a particular way, they could be in trouble with their IRS Status.

[berni_mccoy]

24. BUSTED! Here is the problem

Look at these ads:

http://www.moveamericaforward.org/index.php/MAF/AdCampaign

"Support Bolton" - nuff said
"Shameless Politicians" - directed at Kerry during 2004 campaign
"U.N. Photo Album" - directs voters to vote for anti-U.N. reps

These guys are acting as a thinly veiled PAC. They should NOT be tax exempt.

[DoYouEverWonder]

4. About half way through it

A couple of interesting things so far.

1 - The Exec. Director is Siobhan Guiney and he was paid $25406.29 last year. Curious who he is?

2 - Howard Kaloogian is listed has an unpaid co-chair. There may be some campaign finance issues here if he benefited in any way politically from his association with this group. For example, did they promote his candidacy at any of their events, that sort of thing.

3. Melanie Morgan is the 2nd unpaid co-chair.

4. Their Bank Service and Process Charges expenses seem pretty high at $35802.07. Don't know what the heck would cost that much for banking and/or credit card fees?

[gatorboy]

6. Siobhan Guiney is a former Repug lobbyist

and also part of The Top Ten Conservative Idiots (No. 160)

[RedEarth]

11. One of The Top Ten Conservative Idiots.... lol...that's great

lol.... I love that list. There are so many conservative idiots it's hard to narrow it down....there are millions of them. So if someone makes that list, they are bound to really be a freakin idiot.

[gatorboy]

7. A bit more:

http://www.pacificviews.org/weblog/archives/000202.html

Then I called the phone number for Move America Forward, and a polite young man comes on who instantly recognized my voice as I started to talk. It's the same person who answered the phone when I called the RM+R number. For a minute I thought I'd dialed wrong, apologized for calling back again, and said goodbye. But I hadn't dialed wrong.

So a little while later, Siobhan Guiney from MAF calls me back. (From her MAF bio: "She has worked as a legislative advocate fighting for the people against liberal corruption.") She says that RM+R did register the site for them, but that they hadn't paid for it or consulted on the name. Paid staff at MAF did the design work, and she said that she paid for service when they rolled the phones over to the same receptionist, and that the two groups only shared a building.

Guiney further denied that any RM+R employees did work for MAF on company time, or that they had any involvement in the organization. But after she'd completely denied the possibility of involvement, she volunteered that some group had falsely accused RM+R of being a GOP PR firm. I said it looked like they did most of their work for the GOP, and asked her what was wrong with being a GOP PR firm. She said that they were political consultants, and not really a PR firm.

[motocicleta]

14. sorry. Who's RM+R? eom

[gatorboy]

18. Russo Marsh + Rogers

http://www.rmrwest.com/index2.asp

[DoYouEverWonder]

5. Oops, they lied

Page 8 of Document

Part III - Statement of Activities - They answered NO! LOL


During the year, has the organization attempted to influence national, state, or local legislation, including any
attempt to influence public opinion on a legislative matter or referendum? If “Yes,” enter the total expenses paid
or incurred in connection with the lobbying activities
$ (Must equal amounts on line 38, Part VI-A, or line i of Part VI-B.)

[AValdoux]

8. Hard to tell without detail

They claim to exist to "Support US Troops & Defeat Terrorism" by producing tv/radio commercials. They spent the bulk of their funds ($ 396582.79) on this except for $30827.92 worth of coffee to the troops, a teddy bear ( $219.97)& a few rallies to remember 9/11 ( $9406).

The Bank Service & Processing Charges is unusually high. Even if all the donations ($546964.38) were processed by credit card the highest % processing fee I've seen is 3%, that would come to $16408.93. So the processing fee includes more than the credit card companies fee, like $ 19,245.30.

Their balance sheet is a little weird, the only asset they claim is their cash on hand $43988.67. Its their first return filed and on the cash basis.

Hard to tell without more detail.


AValdoux

[TygrBright]

10. If I were conducting a forensic audit based on this form...

...several things would make my nose twitch, including:

A half-million dollar budget with every dime raised through "direct contributions" and total fundraising costs of twenty-five hundred bucks.

Ex-CUSE me? I have been in nonprofit management/consulting work for more than twenty-five years and I have NEVER seen a legitimate cost per dollar raised of ONE-HALF CENT.

Secondly, they raised half a million bucks and they don't report a dime on line 4, interest on savings and temporary investments. While that may in fact be true (if they kept all the money in a non-interest-bearing checking account) it is appallingly bad management practice. (And hard to believe.) I'd like to see their articles, bylaws, and fiscal policies.

Third, they denied sharing expenses with any other organization in Part VII, including "sharing mailing lists." An organization with a cost per dollar raised of ONE-HALF CENT is obviously not paying any costs associated with accumulating their own mailing lists, not even printing costs for a sign-up card, according to their itemization. There's no line item for renting or purchasing list(s) line-itemed under fundraising costs. That means either some other organization must be sharing their list, or MAF is lying about its fundraising costs.

Also, there's nothing in the expense line for accounting fees. A half-million dollar organization that isn't paying an independent auditor raises my eyebrows and makes me wonder about the qualifications and competence of whomever prepared and filed this 990.

Finally, I'd want to see documentation of the expenses reported in Part III, line a, relating to the "TV, radio, and internet" advertisements, to see whether any of the production and/or distribution costs went to organizations that also JUST HAPPEN to be doing campaign work for any officers/directors of the corporation who might JUST HAPPEN to be running for office.

Unfortunately, the number of full-time forensic auditors the IRS has looking at dodgy little nonprofits is miniscule. As the form is filed, I can't see anything that constitutes an admission of illegality. Just a lot of very, very, question-begging assertions. Given the relative insignificance of the amount involved, it's unlikely to be subjected to review.

regretfully,
Bright

[DoYouEverWonder]

12. Most of the return was left blank

There is no explanation for their income anywhere!

Apparently, this is their first return. They show income in the form of contributions, gifts, grants... of $546,946.38.

1. Then in Part IV-A. Item #15 Gifts, Grants, Contributions received say N/A?!! Excuse me.

2. Whose paying their rent? They show an expense for Occupancy of $1072.00. Who can't rent a locker for that much money, no less offices. Whose 'donating' space and equipment to these folks?

3. Call the IRS. They are paying Guiney to be Exec Director $25,406.29 but they paid no Payroll Taxes. Might be worth an audit of Guiney also to see how he reported the income and if taxes were ever paid?

[TygrBright]

15. IV-A refers to grants

According to the return, their income was entirely derived from "direct contributions" from individuals, which are not the same as grants. Nevertheless, you'll have a VERY hard time finding any experienced nonprofit fundraiser who won't roll around laughing at the notion of a cost per gift of .05%. ESPECIALLY in the first year of the organization.

Donor acquisition is usually a net INVESTMENT, not a net revenue, meaning it generally costs slightly more than the average gift to get the first gift from any donor. The point is the repeat gifts, which net out as revenue. Most established, experienced nonprofits who make their living off direct gifts from individual donors count themselves extremely lucky to keep their cost per gift in the 15%-20% average range.

The occupancy cost could easily be that low if they are getting space "donated" by some officer or director (say, a corner of someone's dining room) and they are just reimbursing that person for utilities or whatever. But yes, as part of an overall pattern, it rings the suspicious bell.

Generally payroll taxes are lumped in with total payroll costs on the 990. Payroll tax accounting is a quarterly function involving a whole different set of forms.

Clarifyingly,
Bright

[DoYouEverWonder]

19. Thank you for the clarifications

I just know enough about this stuff to be dangerous, in the meantime I am more then glad to pay my accountant to keep me honest.

A couple of questions -

1. Even if IV-A is not the appropriate form, I don't see where they account for the income they report on Part 1-A under Direct Public Support. Is it not necessary to explain the source of that income in one of the attachments?

2. According to this report they claim they had paid staff do the design work for their website but the only report paying for an executive director. Wouldn't expenses for other 'paid staff' be reflected in their return? I don't see it?



So a little while later, Siobhan Guiney from MAF calls me back. (From her MAF bio: "She has worked as a legislative advocate fighting for the people against liberal corruption.") She says that RM+R did register the site for them, but that they hadn't paid for it or consulted on the name. Paid staff at MAF did the design work, and she said that she paid for service when they rolled the phones over to the same receptionist, and that the two groups only shared a building.

Guiney further denied that any RM+R employees did work for MAF on company time, or that they had any involvement in the organization. But after she'd completely denied the possibility of involvement, she volunteered that some group had falsely accused RM+R of being a GOP PR firm. I said it looked like they did most of their work for the GOP, and asked her what was wrong with being a GOP PR firm. She said that they were political consultants, and not really a PR firm.

http://www.pacificviews.org/weblog/archives/000202.html

[TygrBright]

21. Actually, they DO itemize some staff time...

... in addition to the ED. In Part II, Line 26, they show an additional $18K for staff costs. However, they are all allocated either to management or program. Which, if the website includes fundraising in its purpose, and some of these payments were to staff for website design, is definitely dicey. But again, the amount is too small to raise flags at the IRS.

And no, it is not necessary for 501(c)(3)s to itemize accounts for individual gifts. To require such would pose an undue burden on small, legitimate nonprofits who get by on hundreds or even thousands of small gifts each year. There might be exceptions for really large gifts, especially in the educational and health care organizations' schedules, but I'm not enough of an authority there to pinpoint it. It would certainly be greater than $1,000, in any case. The amount claimed in direct contribution income here, @$546K, could be 'assumed' to represent an average gift size of $100 from 5,500 or so individual donors.

(I'm betting it's NOT, actually, I'm betting there's a few large ones in there--but not large enough to require separate accounting, a few dozen in the $1,000 - $10,000 range, and the rest in small amounts. And even the larger ones were probably broken up into increments too small to require separate accounting.)

Again, the really, REALLY suspicious thing here is the cost per gift of .05% That means NO money spent in prospecting, NO money spent on compiling or renting lists, NO money spent on preparing appeal materials, documents, etc., NO money spent sending out thank-you notes (UNBELIEVABLE!) etc. Totally bogus.

disgustedly,
Bright

[onenote]

13. not an expert but a couple of things that got my attention

They claim to have raised over 1/2 million in direct contributions and to have over 43K left over, but not a dime in interest. To they just keep the cash under the mattress?

And they have a website that they use for fundraising -- where are its costs?

onenote

[motocicleta]

16. my financial management professor suggests,

and bright probably can give us the thumbs up or down on this, that the IRS will not look at these guys for any reason for 5 years from the day they start. It seems MAF has only been around for 2 years, so if nobody complains to the IRS until 2009, they ain't liftin a finger. However, my prof, who is also a nonprofit management consultant, suggests that the IRS has a tendency to crack down when they get lots of complaints from good, tax paying Americans.

[motocicleta]

20. What I meant to say was,

the 990s maybe don't have anything explicitly illegal in them, but if lots of people complain that the ways MAF is spending its money are ways that are not in line with IRS regs for nonprofits, then the IRS will more likely sit on MAF with its auditors. Whether this ends up with MAF getting shafted is another story, but certainly siccing the feds on these scumbags is an end in itself.

Unfortunately, I cannot find any way to complain to the IRS online. All I can find is the link to the directions for writing to the IRS, oldschool style.
http://www.irs.gov/compliance/enforcement/article/0,,id=106778,00.html
If anybody can find a more direct way to report, I'd love to see it.

[TygrBright]

23. Generally true...

...that the IRS tends to let newbie organizations slide for a few years, especially when they're comparatively small, as this is, and they don't have any Schedule A items or Part III, line 2 qualifications.

And the route to getting the IRS to look at something like this is complex:

One, complaints from actual DONORS to the organization get attention, whether made to the state's Attorney General or directly to the IRS. And yes, there's no automated complaint system. Complaints about how gifts were solicited, used, etc. can open up an enquiry. (Example: Donor Smith gave $5,000 specifically to support running an "educational program" on KBGT Radio, and then found out later that the program was run, but cost only $1500. Donor Smith has the document (receipt, thank-you, copy of the note that went with the check, etc.,) making it clear that the organization knew the gift was for that purpose, Donor Smith complains, document in hand, it will get some attention.)

Two, complaints from an organization or person negatively affected by MAF's program or fundraising activities, who can make a credible case that the program activities in question are either incompatible with the organization's stated purpose/mission or were funded improperly, or that the fundraising activities raised money in a way that should not be tax-exempt.

Three, complaints from a public office holder, candidate for office, or public employee that the organization's activities constituted lobbying, outside what is allowable for a 501(c)(3) organization, or that the organization's allowable lobbying activities were not reported as such. However, in order to be regarded seriously, these complaints have to come from someone with standing who can document and/or reasonably show that a specific lobbying activity took place.

501(c)(3) organizations can "advocate" or "educate" all they want, so long as they don't attempt to influence specific legislation or get a candidate elected. Lots and LOTS of liberal and progressive organizations do extensive "education" activities to promote the anti-war cause. Sauce for the goose, etc. The only place where such activities gets dicey is in organizations receiving public funds, which puts them under the Hatch Act. That doesn't apply here.

MAF is perfectly entitled to raise money to spew conservative propaganda all over California if they want, as long as they stay out of electoral campaigns and direct lobbying activities. It looks like they've skated that line pretty carefully. The only places they might be vulnerable is in the allocation of expenses and any unreported relationships with campaign/lobbying organizations for shared purposes.

And again, the amount involved is too small to raise any flags without someone who has 'standing' to make a formal complaint.

regretfully,
Bright

[motocicleta]

28. bummer

[Rainscents]

17. Where is OLDLEFTYLAWYER???

We need him right now!!! Where are you???

[Binka]

31. Lefty Is A Her

A really beautiful one!

[berni_mccoy]

25. BUSTED: See my post #24 Above.

[berni_mccoy]

26. More IRS Violations:

On the left-hand side of their page, they say
"Current MAF Projects:
Click on the graphic image below to find out more about each MAF project."

One of those is "CensureCarter.com".

It doesn't get any more political than that.

[TygrBright]

29. Unfortunately...

...Carter is neither running for office nor attempting to pass (or defeat) a specific piece of legislation. Running an ad denigrating him may be tasteless, crude, and childish, but it is not illegal for a 501(c)(3) organization.

Let's turn the situation around. Suppose you started a 501(c)(3) organization with the stated purpose of "promoting civil rights for gay people."

Assuming you carefully avoided the language "Call your Representative and tell him to support bill #XXX" or "Vote against Candidate Jones because he is bigoted against gay people," you would be perfectly within your rights to raise money to run advertisements calling "Rev." Fred Phelps opprobrious things and telling people to stand up to him and his loonies when they show up in your town. It would be entirely permissible, for example, to run an "educational" program telling people why some Caribbean nation is entirely wrong to ban the film "Brokeback Mountain." It would even be perfectly legal for you to raise money and use it to tell people to "help us advocate for gay rights" or to "March for gay rights" as long as you weren't promoting a specific piece of legislation (even if such legislation were pending!) And yes, you could run ads telling people to object to the Governor's proposed appointment of Jane Peters for Secretary of the State Dept. of Education because she's an anti-gay bigot. She's not running for public office, and she's not a piece of legislation.

The only way you'd get in trouble for doing those things would be if the stated mission under which your organization was established was (for example) "to save the wetlands" and you used money people gave you to buy endangered land to run the gay rights march, etc.

The first amendment cuts both ways. "Political" speech is perfectly acceptable as a purpose for 501(c)(3) organizations. Would you have it any other way? Do you know how many wonderful, liberal advocacy organizations would go out of business if they could not have a 501(c)(3) tax exemption?

I am NOT supporting what MAF does, but they have a right to do it, so long as they stay within the law and comply with the law in respect to proper reporting of their income, expenses, etc. If you want to submarine them, look for links to an actual candidate running for office whose campaign can be proved to have direct financial benefit from the money given to MAF (Example: Do those phones, office space, etc., ever cross the line into working on Loogie's campaign? Do volunteers recruited to collect teddy bears for MAF get routed into stuffing envelopes for the Loogie campaign?) Or look for ways in which they've violated IRS regulations in allocating and reporting what their money was spent on. (GLARING EXAMPLE: It cost them $2500 to raise $500,000!!!!??!?)

clarifyingly,
Bright

[Nothing Without Hope]

27. K & R - Great find! I'll add it to my Kaloogian thread here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x797943
thread title (3-30-06 GD): KALOOGIAN PHOTO THREAD LIST and the perfect Tom Tomorrow CARTOON:

cross-posted in the Research Forum:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=358x3488
thread title (3-30-06 Research Forum): KALOOGIAN PHOTO THREAD LIST and the perfect Tom Tomorrow CARTOON

I hope they are nailed for tax fraud. Hoping for an honest judge...

[DinahMoeHum]

30. Does anyone have a line to Josh Marshall of TPM?? DailyKos??

who can get this thread over to him/them?

Seriously, this is very interesting food for thought.

Thanks, gang! Keep on keyboarding.

:yourock: