Gospel for Asia in Canadian Court Hearing: Once You Find Out the Truth About Your Donation, Stop Giving If You Don’t Like It

Today, a Canadian court held a hearing to decide whether or not a lawsuit would be certified as a class action suit. Attorney Paul Guy represented plaintiff Greg Zentner in the effort to certify the case as a class action suit representing all donors to Gospel for Asia – Canada.

Attorney Jeffrey Leon represented GFA – Canada and argued that the suit should not be certified as a class action suit. Leon also made an argument that donors have no standing to sue since they suffer no loss when they donate, even to a fraudulent organization. Leon told Justice Cavanaugh that Canadian authorities could weigh in and prosecute fraud if it exists. However, individual donors don’t have a loss to sue over, according to Leon.

It was curious to me that Leon sought to cast doubt on the identity of GFA in India during the recent raids on Believers’ Church. Even though the funds sent to Believers’ Church came from GFA, he sought to distance K.P. Yohannan’s organization in India from GFA-Canada. Overall, it appears to be a large part GFA-Canada’s defense to pretend there is no connection between GFA-Canada, GFA-World, Believers’ Church and the various trusts in India.

Yohannan’s organizations are controlled by him and his family. Various national groups send their money to Believers’ Church in India (or at least did when Believers’ Church was allowed to accept those funds). Money was donated in Canada with the intention of sending it to India for use by Believers’ Church. If donors checked one box for use of their funds (e.g., poor people), but those funds went for building for profit hospitals and schools or a purpose other than checked by the donor, it is hard to escape the conclusion that the charity misled the donor.

Read the briefs (“facta” in Canada) associated with the case thus far.

Factum for Greg Zentner (plaintiff)

Respondents Factum Pat Emerick and GFA World

Factum of the  United States Defendants, Gospel for Asia, Kadappiliaril Punnose Yohannan, Daniel Punnose, and David Carroll

Reply Factum of Greg Zentner

Observations

Jeffrey Leon said K.P. Yohannan doesn’t have control over the GFA/Believers Church organizations. Historically, Yohannan has been in control, but I can see claiming he isn’t or hasn’t been in charge is an ongoing part of GFA’s defense. However, I have shown in numerous blog posts that Yohannan is involved in nearly all of the GFA organizations around the world. He has said in the past he doesn’t sit on the boards in India; however, I showed that he does (or at least did in 2015).

It is stunning that GFA’s lawyers cast doubt on the charities raided by India authorities. As a legal strategy, one can claim that hearsay can’t be admitted, but this is deceptive. Of course, the Indian government raided Believers’ Church, the same church that is run by K.P. Yohannan and takes funds from GFA-Canada and GFA affiliated organizations around the world. What do all of the donations go for? They are sent to India. Since 2017, those funds have been received illegally. Who knew about that? Who approved it? Who used those funds despite them being accepted from Canada against Indian law? Is anybody really going to try to make a case that K.P. Yohannan didn’t authorize all of those actions?

GFA’s case summed up by attorney Jeffrey Leon is this: If you don’t like how we used your donations, then don’t give us any more money. And if you want to claim we used it fraudulently, then tell it to the regulatory agencies. Don’t sue us for fraud.

What a smug, dismissive line of thinking. How are donors supposed to know what they are donating to if GFA doesn’t tell them? When donors find out that funds are used for purposes other than specified, it is too late.

 

Trump Foundation Pays Damages and Dissolves

In any other administration, this would be huge news and perhaps rise to the level of impeachment talk. In early November, the state of New York filed a settlement with the Trump Foundation which required the organization to close and give nearly $4-million to charities. That sum includes a $2-million fine and the remaining $1.8 million in Foundation assets.

Read the Trump Foundation Settlement Here

I have been reporting on churches, Christian nonprofits and other charities for several years and have seen some corrupt dealings. This one ranks high on the corruption scale. Trump used this foundation as a kind of slush fund to pay off debts, support his campaign, and in some cases make other political donations. Even though foundations are supposed to remain separated from the for profit business side of an enterprise, Trump regularly mixed the two worlds to advance his interests.

The New York Attorney General publicly announced an investigation into the Foundation on September 13, 2016. If you read through the settlement, you will notice that the efforts to repay funds taken from the Foundation and used for various non-charitable purposes came after that date in late 2016 or in 2017. After the NY AG started an investigation, the Foundation then started to pay back taxes on donations and funds used for non-charitable causes.

One of the key issues in the case was a fund raising event for veterans that occurred in Iowa during the 2016 campaign as a joint effort of the Trump Foundation and the Trump campaign. Trump skipped a debate there and hosted a rally which led to funds being raised and given to veterans’ groups in campaign related events, thus mixing campaign work with the Foundation. In making her ruling about damages, Judge Saliann Scarpulla referred to this event along with Trump’s general negligence which is described in more detail below.  About Trump’s management of the Foundation, Judge Scarpulla wrote:

As a director of the Foundation, Mr. Trump owed fiduciary duties to the Foundation, pursuant to N-PCL § 717; he was a trustee of the Foundation’s charitable assets and was thereby responsible for the proper administration of these assets, pursuant to EPTL § 8-1.4. A review of the record, including the factual admissions in the Final Stipulation, establishes that Mr. Trump breached his fiduciary duty to the Foundation and that waste occurred to the Foundation.

Mr. Trump’s fiduciary duty breaches included allowing his campaign to orchestrate the Fundraiser, allowing his campaign, instead of the Foundation, to direct distribution of the Funds, and using the Fundraiser and distribution of the Funds to further Mr. Trump’s political campaign. The Attorney General has argued that I should award damages for waste of the entire $2,823,000 that was donated directly to the Foundation at the Fundraiser. In opposition, Mr. Trump notes that the Foundation ultimately disbursed all of the Funds to charitable organizations and that he has sought to resolve consensually this proceeding.

As stated above, I find that the $2,823,000 raised at the Fundraiser was used for Mr. Trump’s political campaign and disbursed by Mr. Trump’s campaign staff, rather than by the Foundation, in violation of N-PCL §§ 717 and 720 and EPTL §§ 8-1.4 and 8-1.8. However, taking into consideration that the Funds did ultimately reach their intended destinations, i.e., charitable organizations supporting veterans, I award damages on the breach of fiduciary duty/waste claim against Mr. Trump in the amount of $2,000,000, without interest, rather than the entire $2,823,000 sought by the Attorney General.

The judge found violations of law but didn’t fine him as much as the AG wanted her to. The judge did issue the fine in response to the factual claim that Trump breached his fiduciary duty to the Foundation. Not only did he do so in violation of laws as cited by Judge Scarpulla in the section above, there were other instances cited. I outline those below.

The settlement outlines other offenses that both sides agreed occurred.

In one 2007 case, Trump used Foundation money to pay a lawsuit settlement to a charity. It wasn’t until after the NY AG started the investigation that Trump repaid the Foundation with interest on March 10, 2017. A Trump supporter might claim that Trump always intended to repay the Foundation. My answer is that it was illegal at the start (which Trump denied) and secondly, I am skeptical that Trump would ever have paid it back without the pressure of the AG investigation.

In 2012, the Trump Foundation gave $157,000 to the Martin Greenberg Foundation to satisfy a debt owed by one of Trump’s golf courses. Again, this is illegal. Trump didn’t reimburse the Foundation until 2017 after the AG investigation was publicly announced.

In 2013, Trump caused $25,000 to be donated from the Foundation to a PAC supporting Pam Bondi’s campaign for attorney general. While contribution itself may have been legal, the Foundation did not pay the required tax on the contribution until 2016.

Also in 2013, the Foundation contributed funds to the DC Preservation League which entitled it to an ad in the organization’s fund raising program. However, instead of advertising the Foundation, Trump placed an ad for his DC Trump International Hotel, thereby mixing the for profit and nonprofit. Again, it was only after the investigation started that any remedy was undertaken.

Perhaps the most emblematic incident is the purchase of a portrait of Trump by Trump with Foundation funds. In 2014, at a children’s charity event, Trump bought his own portrait for $10,000 with Foundation funds and after storing it for awhile, displayed in one of his hotels. In November 2016 — after the investigation started — the painting was removed from the hotel and sent to the Foundation.

Finally, in 2015, Trump’s real estate management company Silver Springs pledged $32,000 to a charitable organization in New York. The charitable group’s work stood to benefit one of his residences. Rather than pay that pledge himself, he had the Foundation cover it.

The settlement also requires Trump to pay the $11,525 he used from Foundation money to pay for sports memorabilia at a Susan G. Komen benefit auction.

This investigation was triggered by reporting from various groups, including Scripps going back to 2016. Given the Scripps report, Trump was fortunate to get by with just this settlement.

Read the settlement again and then read Trump’s statement about the settlement:

Trump v. Facts

Trump’s statement bears little resemblance to the truth. He says “every penny of the $19 million raised by the Trump Foundation went to hundreds of great charitable causes.”

This isn’t true. Pam Bondi’s run for AG isn’t a charitable cause. Using Foundation funds to get an ad for your for-profit business isn’t a charitable cause. Moreover, buying sports collectibles with Foundation money doesn’t seem like an honest description of the activity. Yes, a charity got some money, but they had to give you something in exchange. Giving Foundation funds to a nonprofit that benefits your real estate value doesn’t seem like a particularly generous use of those funds. That’s the definition of self-dealing.

Trump claimed in his Twitter statement that all the AG found was “incredibly effective philanthropy and some small technical violations, such as not keeping board minutes.”

This isn’t true. The settlement makes clear that the Foundation board of directors didn’t meet at all from 1999 through November, 2018. The Board of Directors had no oversight of any kind through that period. The settlement describes just the opposite of “incredibly effective philanthropy.” There were numerous violations and instances of self-dealing which resulted in the various breaches of fiduciary responsibility noted in the settlement.

It is true that the dissolution is presented in the settlement as a mutual agreement, but there is an important section which has not been discussed much in the news accounts about this case. The judge specifies what Trump and any future charity must do if Trump is ever on the board of a charity. Trump cannot serve on a board where a majority of members are family or have business relationships with him. The charitable organization must not engage in related party transactions with any entity owned or controlled by him. If Trump forms a new charitable organizations, he must ensure that annual reports are filed with the state for a period of 5 years. The details of what must be in the reports are spelled out. In short, Trump must comply with the law.

Furthermore, recall Judge Scarpulla’s assessment of Trump’s actions: “A review of the record, including the factual admissions in the Final
Stipulation, establishes that Mr. Trump breached his fiduciary duty to the Foundation and that waste occurred to the Foundation.”

Let me repeat, the judge and AG did not find “incredibly effective philanthropy.”

Finally, Trump’s spin about the $2 million donation to 8 charities is laughable. The court ordered him to pay that sum in damages (“I award damages on the breach of fiduciary duty/waste claim against Mr. Trump in the amount of $2,000,000”.

So even after being caught in numerous violations of law and stipulating to them in public documents, Trump cannot bring himself to tell the truth about it. As noted, in a normal time, this might be article of impeachment number three.

 

Jerry Falwell is Wrong About the Poor

There are several head scratching quotes from Jerry Falwell, Jr. in his New Year’s Day interview with Joe Heims in the Washington Post. One such quote which caught my eye is this:

Why have Americans been able to do more to help people in need around the world than any other country in history? It’s because of free enterprise, freedom, ingenuity, entrepreneurism and wealth. A poor person never gave anyone a job. A poor person never gave anybody charity, not of any real volume. It’s just common sense to me.

While job creation might be out of reach for many low income people, charitable giving is something the poor do often. As Relevant magazine pointed out, Christian college president Falwell appears to have forgotten Jesus’ teaching about the widow and her few cents. Beyond Falwell’s insensitivity to the Bible, he is wrong about the poor and charitable giving. Actually, low income people as a group give a lot and on average they give more as a percentage of their income than rich people.

Given Falwell’s role as a fund raiser for his college, I am surprised he isn’t aware of this. In philanthropy literature, the link between income bracket and giving is well known. Although the truly poor don’t often itemize charitable gifts, lower income brackets are responsible for significant amounts of charitable giving compared to higher brackets. This is especially true of religious giving.

A 2007 Indiana University study found that donors making under 100,000/year gave nearly $60 Billion to religious organizations compared to $8.6 Billion given by donors making over $1 million/year. The per donor gift was much smaller in the lower income group, but together the lower income group represented nearly 60% of all giving to religious causes. In contrast to Falwell’s claim, that’s some real volume. No doubt Falwell’s college gets many widow’s mites on a monthly basis to help keep those doors open.

I realize that $100,000/year is not poor. However, this bracket is more likely to include large families with limited resources. As noted above, people in the lowest income groups don’t often itemize contributions and so it is harder to capture those data via the Indiana U. methodology. However, other research supports the contention that lower income persons give more as a percentage of income than the rich.

For instance, a 2014 study published in the Chronicle of Philanthropy showed that the wealthy reduced their giving during the economic downtown while lower and middle income donors increased giving. The lowest income bracket – those making less than $25,000/year – increased their giving by 17% from 2006 to 2012. The lowest income group demonstrated the highest percentage increase of all groups.

The 2014 study wasn’t unusual. Much prior research has found that those in low income brackets give more as a percentage of income than the wealthy. According to researcher Roger Barnett, “Research in the area has established that, on the average, high income donors give more to charitable causes than do people with low incomes. However, in Britain (and in the United States) the poor have for decades been observed to donate proportionately higher shares of their income to charity than the financially better off (emphasis in the original) (p. 520).

Falwell, Jr.’s college has been helped out in the past by big gifts (e.g., self-proclaimed messiah Sun Myung Moon) so perhaps he is influenced by the big donors. However, as a group, the poor do give and they give a lot. He is wrong and shouldn’t spread this misinformation. If I were a low income donor to Liberty University, I would have to rethink my contribution.

 

Federal Tax Forms Show Why the Sekulow Family Business Should Be Investigated (UPDATED)

The UK Guardian reported yesterday that two state AG’s (NY and NC) will look into the finances of Trump lawyer Jay Sekulow and his fundraising charities. Examining the federal tax forms from Christian Advocates Serving Evangelism (2015 990), I can see why. Remember CASE is the nonprofit which serves as the fundraising organization for Sekulow’s American Center for Law and Justice, supposedly a religious liberty law firm.
According to the IRS, family relationship on the board of a nonprofit raise a red flag:

Irrespective of size, a governing board should include independent members and should not be dominated by employees or others who are not, by their very nature, independent individuals because of family or business relationships. The Internal Revenue Service reviews the board composition of charities to determine whether the board represents a broad public interest, and to identify the potential for insider transactions that could result in misuse of charitable assets.

It seems obvious that a nonprofit should not be organized like a closely held family company. Now look at the board of Sekulow’s CASE:
CASE 990 Board
Perhaps the name of the organization should be changed to Christian Advocates Serving Sekulows.
The only person on the board who is not named Sekulow is Colby May. However, he cannot be considered an independent board member because his income is dependent on grant money received from CASE/ACLJ.  May runs the ACLJ’s DC affiliate which is completely funded by CASE/ACLJ. A review of ACLJ-DC’s 990 form shows May as the Director.
ACLJ DC May
ACLJ-DC’s income was reported on the 2015 990 as $853,796.
ACLJ-DC 990 income
As can be seen on ACLJ’s 2015 990, a grant of the exact same amount was given to ACLJ-DC.
ACLJ to ACLJ DC
 
I suspect CASE might have to provide more information to the AGs about how executive compensation was decided since none of the board members can be considered independent. Again, the IRS guidelines specify independence in setting compensation.

The Internal Revenue Service encourages a charity to rely on the rebuttable presumption test of section 4958 of the Internal Revenue Code and Treasury Regulation section 53.4958-6 when determining compensation of its executives. Under this test, compensation payments are presumed to be reasonable if the compensation arrangement is approved in advance by an authorized body composed entirely of individuals who do not have a conflict of interest with respect to the arrangement, the authorized body obtained and relied upon appropriate data as to comparability prior to making its determination, and the authorized body adequately documented the basis for its determination concurrently with making the determination.

The CASE/ACLJ 990 form indicates the Sekulows and CASE/ACLJ engaged in four sizable mutual transactions as well as a major one involving a company half-owned by Jay Sekulow. See below:
CASE CLAG
Given the fact that none of the board members can be considered independent, how could this board prevent conflicts of interest as defined by the IRS?

B. Conflicts of interest. The directors of a charity owe it a duty of loyalty. The duty of loyalty requires a director to act in the interest of the charity rather than in the personal interest of the director or some other person or organization. In particular, the duty of loyalty requires a director to avoid conflicts of interest that are detrimental to the charity. Many charities have adopted a written conflict of interest policy to address potential conflicts of interest involving their directors, trustees, officers, and other employees. The Internal Revenue Service encourages a charity’s board of directors to adopt and regularly evaluate a written conflict of interest policy that requires directors and staff to act solely in the interests of the charity without regard for personal interests; includes written procedures for determining whether a relationship, financial interest, or business affiliation results in a conflict of interest; and prescribes a course of action in the event a conflict of interest is identified.

According to the 990, a third party expert reviewed the 5-million payment to Sekulow’s law firm and said it was all fine. I hope the AGs get to interview that third party. In the spirit of transparency, I call on Sekulow and company to disclose the identity of the expert and the basis on which the transaction is reasonable.
I hope the attention Sekulow is now getting will shine a light on the disgusting fund raising practices too many Christian charities use. Many such charities flaunt the very values and beliefs they claim to be upholding.

The Guardian Finds Skeletons in Trump Lawyer Jay Sekulow's Closet

I hope you go read this article by the Guardian on Jay Sekulow’s fund raising tactics.  I had been aware of the massive amounts of money he has raised through fear mongering but I didn’t know about the actual tactics. This is obscene.
Sekulow has a company that manipulates Christians into giving money they can’t afford to give. Reminds me of K-LOVE. Here is a script:
Sekulow CASE
I hope reporting like this helps dry up the money flow to these people. Most charities of this size simply don’t need your money.