Archives for August 2013

Government Executive: IRS Probe Continues to Divide House Oversight Panel

By Charles S. Clark
July 30, 2013

Two conservative groups with long-standing tax-exempt status were unfairly targeted by the Internal Revenue Service and merit a new investigation by the inspector general, according to two members of the sharply divided House Oversight and Government Reform Committee.

Reps. Darrell Issa, R-Calif., chairman of the panel, and Jim Jordan, R-Ohio — acting without cooperation from the panel’s ranking member Elijah Cummings, D-Md. — on Monday wrote a letter complaining about audits and unfair paperwork demands that a controversial unit of the tax agency imposed on the Arlington, Va.-based Leadership Institute and the Herndon, Va.-based Claire Boothe Luce Policy Institute.

“The totality of your ‘targeting’ investigation along with evidence obtained by the committee points to the fact that the IRS may have selected certain conservative organizations for additional scrutiny after the IRS already approved their tax-exempt status,” Issa and Jordan said in a letter to J. Russell George, the Treasury inspector general for tax administration.

The Leadership Institute, founded in 1970 and run by longtime conservative activist Morton Blackwell, reported about $15 million in assets in 2012. During IRS audits, the lawmakers’ letter said, the group had to turn over 23,430 pages of documents at a cost of some $50,000. Staff told congressional investigators that they were asked “invasive questions, including requests for information about its interns and where they worked after their internships.”

The Clare Booth Luce Policy Institute, founded in 1993 to advance conservative women and run by Michelle Easton, an Education Department appointee during the Reagan and George H. W. Bush administrations, reported assets of some $2 million. Easton told congressional staff that its treatment by the IRS amounted to “harassment,” and that its audit “took the greater part of 2011 and cost tens of thousands of dollars.”

Both have 501(c)3 nonprofit status.

The Republican lawmakers want auditors to determine whether the Cincinnati-based entity within the IRS’ Exempt Organization Division called the Review of Operations Unit had been flagging groups with longtime tax-exempt status in addition to the 300-400 groups that had applied for the status beginning in 2010 that became the subject of this spring’s IRS scandal. Issa quoted an email from Lois Lerner, the director of Exempt Organizations who is on administrative leave and who so far has declined to testify to Issa’s panel, instructed underlings that “[o]ne of the recommended actions is going to be to send ROO referrals for those cases that cause us concern resulting from organizations making changes after being questioned during our case development.”

The request on Tuesday drew a rebuke from Cummings, who in a letter to Issa, said, “your letter appears to provide partial and incomplete information and to disregard key evidence that is contrary to your political narrative.”

Quoting from transcripts of congressional staff interviews with IRS employees who processed the nonprofits’ applications, Cummings said Issa’s version fails to explain that the head of the Exempt Organizations Determinations Unit in Cincinnati told the committee that referrals to the ROO were not “systematic,” but instead were done on a case- by-case basis. Also left out of the request to TIGTA, Cummings added, was the testimony from another employee saying that a referral to the ROO did not automatically result in an audit of the organization.

“The committee,” Cummings concluded, “has identified no evidence that the IRS discriminated against conservative groups that had been approved for tax exempt status.”

In another sign that the political and legal maneuvering stemming from the IRS scandal are not fading away, a transparency advocacy group called Cause of Action on Monday announced that it has hit the IRS’ Exempt Organizations Division with a complaint about Enroll America, a nonprofit that is also a 501(c)3 that works on a parallel track with the Health and Human Services Department to promote enrollment in health insurance exchanges during implementation of the Affordable Care Act.

Cause of Action is seeking removal of Enroll America’s charitable status because it operates “like a business league or trade association,” providing a profit incentive and performing marketing and lobbying for medical and insurance interests rather than charitable acts. “If Enroll America is designed to benefit insurance companies instead of the American public, then its charitable status no longer applies,” argued Dan Epstein, Cause of Action’s executive director. “An organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

To read the full article, click here.

The Daily Caller: McAuliffe’s GreenTech company bypassed state law in acquiring land, failed to produce a single car

McAuliffe’s GreenTech company bypassed state law in acquiring land, failed to produce a single car

Patrick Howley


10:47 PM 07/31/2013

Virginia candidate for governor Terry McAuliffe bypassed state law to acquire land for his “green car” factory in Mississippi and invited President Obama to attend an event for the company that subsequently bogged down in a wide-ranging scandal.

Documents obtained by Cause of Action through a Freedom of Information Act request indicate Obama considered attending the rollout of GreenTech Automotive’s first electric car. McAuliffe was the chairman of the company, but quietly resigned in December 2012.

GreenTech is currently embroiled in a scandal over the company’s EB-5 visas. (RELATED: Virginia lawmakers pressure McAuliffe over GreenTech scandal) The Washington Free Beacon recently reported there is no evidence GreenTech has produced any cars, green or otherwise.

“GreenTech Automotive, a Chinese-funded EB-5 project, is rolling out its first electric car at their pilot plant in Horn Lake, Mississippi… President Bill Clinton’s attendance has been confirmed by GreenTech, whose brother-in-law Tony Rodham is President & CEO of the EB-5 regional center Gulf Coast Funds Management, LLC which facilitated the project. President Obama has been invited and there is a chance that he will attend,” according to an April 2012 memo the Mississippi Development Authority sent to Mississippi governor Phil Bryant.

The event took place in July 2012, with Bill Clinton in attendance.

But the company bypassed Mississippi’s legal process in buying up land for the factory in 2011.

The Tunica County Economic Development Foundation, a group in Mississippi headed by Tunica County Chamber of Commerce president and CEO Lyn Arnold, worked out a strategy to secure land for GreenTech without going through the proper legal approval process.

“The county is preparing to purchase the 100 acres for GTA and close by 9/9/2011,” Arnold wrote in a September 1, 2011 email providing “an update on GTA from the Tunica perspective.”

“The land will actually become the property of the Tunica County Economic Development Foundation (my organization). GTA will have full use of the land even to the point of pledging the land for additional financing. Once the facility is constructed and employment reaches 350, the land will be fully transferred to GTA. The only way the deal is structured this way is without special legislation, this is the only legal way a county can provide land to benefit a private company,” Arnold wrote.

“I have been speaking with Charlie regularly, mostly about the EB-5 applications and getting those approved by US Customs and Immigration. USCIS has stalled us at every opportunity, but along with Senator Wicker’s office and Congressman Thompson’s office, we are hopefully moving those approvals along,” Arnold wrote.

Sec. 31-7-13 of the Mississippi Code requires a strict bidding procedure for land purchases over $15,000, mandating a published notice of the sale and requiring competition for a winning bid. As Arnold’s email demonstrates, GreenTech obtained the land from the Tunica County Economic Development Foundation without making a competitive bid.

McAuliffe’s GreenTech scandal is gaining heat as the Virginia gubernatorial race progresses.

U.S. Citizenship and Immigration Services (USCIS)  director Alejandro Mayorkas is currently under federal investigation for helping an investor in Gulf Coast Funds Management, run by Hillary Clinton’s brother Anthony “Tony” Rodham, receive an EB-5 visa, which grants conditional permanent residence to foreign nationals who invest significant amounts of money in the United States. The investor’s application had already been denied by the time Mayorkas became involved, and an appeal had already been shot down.

Mayorkas acknowledged that he met with McAuliffe, a business partner of Rodham, to generally discuss the USCIS visa application process, which McAuliffe complained was too slow.

“I was asked to attend a meeting with Mr. McAuliffe so that I could hear in person his complaints… I heard those complaints, and that was the extent of the interaction,” Mayorkas said.

Gulf Coast Funds Management handles EB-5 visas for investors in GreenTech Automotive, of which McAuliffe is chairman. GreenTech reportedly relies on EB-5 visas for its investors.

McAuliffe and Rodham took a fishing trip together in April 2013 to celebrate the launch of GreenTech’s MyCar electric vehicle, where they were photographed together.

The McAuliffe campaign, Gulf Coast Funds Management and Lyn Arnold did not return requests for comment.

Cause of Action Files IRS Complaint Against Enroll America For Violating the Internal Revenue Code

FOR IMMEDIATE RELEASE                                                                                             

July 29, 2013

Cause of Action Files IRS Complaint Against Enroll America For Violating the Internal Revenue Code

WASHINGTON – Today, Cause of Action (CoA), a government accountability organization, filed a complaint before the Internal Revenue Service (IRS) asking for the IRS to revoke the charitable status of Enroll America, the nonprofit whose mission is to enroll individuals in the Patient Protection and Affordable Care Act’s insurance exchanges. Enroll America is, the complaint alleges, improperly classified as a 501(c)(3) organization and therefore in violation of the Internal Revenue Code.

“If Enroll America is designed to benefit insurance companies instead of the American public, then its charitable status no longer applies,” said Dan Epstein, executive director of Cause of Action. “An organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

Cause of Action has conducted previous investigations into how non-profit groups are handling federal grant money as well as how the IRS monitors tax-exempt groups. Their report on potential violations of the law concerning stimulus funds that went to a program called Communities Putting Prevention to Work can be found here. A report released last month delves into a little known provision of the tax code called fiscal sponsorship, which is ripe for abuse and not being monitored well by the IRS.  The report can be found here. This Enroll America complaint is the latest in CoA’s work to ensure that organizations benefiting from taxpayer dollars and tax exemption are adhering to the law.

Cause of Action is requesting an immediate investigation to address the following:

  1. Enroll America does not operate as a 501(c)(3) charity; it is organized more like a trade association for the healthcare industry, employing marketing and political tactics to sell health insurance.  Accordingly, Enroll America is not organized and operating exclusively for a charitable purpose.
  2. The for-profit healthcare providers represented on EA’s board of directors and advisory board stand to reap a substantial private benefit from EA that is not shared by its intended beneficiaries, meaning Enroll America fails the private inurement and private benefit doctrines.

Cause of Action will also be sending a letter to Covered California, California’s state health exchange, to alert them of liabilities under federal and state laws and guidelines. Enroll America will be a liaison to state health exchanges across the country, such as Covered California, who manage the sale of health insurance policies.

“The risk of spending federal money in wasteful, fraudulent or abusive ways as they fund outreach activities to enroll the uninsured should put state exchanges on high alert,” said Dan Epstein. “Covered California creates a one-stop insurance marketplace, while conducting outreach similar to that of Enroll America, and we want these exchanges to be aware of the numerous laws and regulations that could present multiple liabilities for them as enrollment begins.”

The complaint can be found here.

The liability alert letter to the General Counsel of Covered California is here.