TBL Staff

Note: The following is based on documents available to the public through the Hillsborough Clerk of the Circuit Court’s online records search engine here.

A March 1, 2007 New York Times story details how approximately 600 non profit groups “have had to file amended tax forms and how “40 individuals owed $20 million in excise taxes” which penalized non profit executives for “being paid excessively.”

According to “IRS Finds Errors in Reports of Nonprofits,” the IRS investigation began in 2004 and focused on tax law compliance and data analysis.

“Among its aims,” the article states, “were to identify and stop excessive compensation to non profit executives and other insiders…The agency have already begun a deeper inquiry into loans made to insiders at charities and foundations.”

Previous articles in this series have covered transactions such as how Shriner executives used charitable donations for their own personal mortgages that remain undisclosed to the IRS.

Other unreported items include:

1) Question 75c: Do any officers, directors or trustee receive compensation from any other organization, whether taxable or tax exempt, that are related to this organization through common supervision or control?

A former executive, John Cawood, appeared to be operating a Florida For Profit corporation, under his name, with the same address, PO Box 31356, as the Shriners. The company’s registration can be found here.

2) Question 77: Key resolutions that alter the governing documents.

A copy of a Resolution (governing document) dated July 6, 2000 was recorded in Polk County, Florida. Question 77 on the Shriners’ 2000 tax return is marked “no.” The resolution can be read here .

3) Question 80a asks “Is the organization related through common membership, governing bodies, trustees, officers, etc, to any exempt or nonexempt organizations? A list of affiliated yet unreported groups is here.

4) Part III, Question 2 asks: During the year, has the organization, either directly or indirectly, engaged in any of the following acts with any of its trustees, directors, officers, creators, key employees or members of their families, or with any taxable organization with which any such person is affiliated as an officer, director, trustee, majority owner, or principal beneficiary:

a. Sale, exchange or leasing of property?

This question has been marked “no” on the Shriners tax returns since, at least, 1998.

A list of mortgages between Shriners Hospitals for Children (SHC) and “directors, officers and key employees” can be found by scrolling down here .

This shows that former executives used charitable donations for multiple personal mortgages; Cumpstone had three morgages and Cawood had two mortgages. The others listed are believed to be Shriner employees.

A list of mortgage satisfactions can be found by scrolling down here .

This shows that satisfactions were recorded in 1998, 2000, 2001, 2002 and 2003 but were not reported to the IRS.

Here is an example of Cawood's mortgage satisfaction that was recorded in 2001 but not reported to the IRS.

Here is the March 29,1985 satisfaction signed by a Shriners Hospitals (501c3 charitable) executive, Molnar, to release the July 23,1979 mortgage, granted to a Shriner (501c10 fraternal) executive, Cumpstone.

An analysis of the Hillsborough County (FL) Clerk’s files revealed a pattern involving executive mortgages being taken out on their homes, then paying it back in unusually short amounts of time.

Here is a copy of one such mortgage filed on March 4, 1987.

Here is a copy of the satisfaction on the same loan, filed on June 12, 1987.

These documents indicate that a mortgage of $150,000 was taken out by Cawood on March 4, 1987 and was satisfied about three months later, on June 12, 1987.

Here is a copy of a mortgage taken out by a former executive on July 8, 2002.

Here is a copy of the associated satisfaction dated July 2, 2003.

This executive, Molnar, paid off this $100,000 mortgage in one year.

Here is a copy of a $51,000 mortgage taken out by an executive on April 5, 2001.

Here is a copy of the associated satisfaction dated July 12, 2001.

This executive, Fleisher, paid the $51,000 back in three months.

Incidentally, last June, a request for tax returns was emailed to the Shriners.

From the email:

"To: Alicia Argiz-Lyons

Re: Unanswered email of July 11

It's been 16 days since I sent my July 11 emails. It remains unanswered as are my phone messages.

I have since come up with a few more questions and a request for more 990's.

Apparently it's ok with the IRS to email 990 requests. I'd like to request the last three years of tax returns for the Imperial Council Session of 2005, Inc., Imperial Council Session of 2004, Inc., Imperial Council Session of 2003, Inc, and if the 2005 returns is not available, then (please provide) the Imperial Council Session of Session of 2002, Inc.

Thank you in advance for answering these questions, as they serve the public interest and are presented in the spirit of non profit accountability and transparency.

Sandy Frost"

A 501c3 non profit charity group, such as the Shriners, is supposed to provide the documents within 30 days of the request. Anything beyond that can be fined at a rate $20 a day. In this case, 307 days have gone by and at $20 a day, could amount to a fine of $6,140 for not providing the documents as requested.

From Shriners: Part 11:

Here is a quote from page 72 of the winter 2003 Shriners Treasurers Association minutes:

“Going to the second page (of the IRS tax exempt return 990), there’s too much work being done, I’m not being over critical, I’m just saying let’s just do the minimum disclosure to the IRS” – Bob Phillips, Director of Temple Accounting”

Why would the director of Temple Accounting tell the Shriner treasurers to “do just the minimum disclosure to the IRS”? Might it be because corporate seems to operate the same way?

Are these executives purposefully keeping things from the IRS such as insider mortgages, possible excess benefit transactions and executives running for-profit businesses out of the charities' head quarters?

At this point, the IRS would not confirm or deny that the Shriners, fraternal or charitable, are being investigated for these or any other undisclosed transactions. However, it seems that these Shriners' "loans made to insiders” and other things left off the Shriners tax returns seem to fit the “IRS Finds Errors in Reports of Nonprofits" profile.

From http://sandyfrost.newsvine.com/ Copyright © 2006 by Sandy Frost. Used by permission.

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