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FOR-PROFIT CHARITABLE FOUNDATIONS

December 28, 2016

FOR-PROFIT CHARITABLE FOUNDATIONS

The Internal Revenue Code makes provision for not-for-profit foundations and other such eleemosynary (charitable) organizations whose purposes come within a particular section of the Code. The idea is, like contributions you and I might make to Habitat for Humanity, the Red Cross and other such genuine not-for-profit organizations, to encourage such contributions to help the poor, children, and others who need help to give them help by allowing a deduction from contributors’ tax liabilities.

The public policy behind encouragement of such tax-deductible contributions to help those in need of help is noble and I applaud it, but there is no such thing as a for-profit charitable foundation, and those who would use the pretense of non-profit organizations for tax-free private gain and use for their own purposes have committed crimes and perhaps worse, have committed moral offenses of the first order in taking resources supposedly to be used for the benefit of the poor for their own, akin to stealing a Salvation Army Christmas pot or a Polio pot of money from a 7-11, which is about as low as you can get.

The foregoing is prelude in introducing us to the recent statement by the president-elect that he has instructed his lawyers to close down his charitable foundation because he did not want even the appearance of impropriety to cloud his effort to serve the people as president. What Trump neglected to tell us is that, according to the New York Times, he has already dipped heavily into such foundation’s tax-free funds to pay his lawyers in various and sundry other lawsuits in which he and/or his businesses are involved, and therefore, if such transgressions were committed within the statute of limitations and if they did in fact occur and are subject to indictment, it makes no difference whether he closes the foundation or not. The crime(s), if comitted within the statute and proven, could call at least for impeachment if not imprisonment as well, depending upon prosecutorial discretion in seeking indictment.

There is something else the president-elect neglected to tell us with his Mr. Clean statement that he is shutting down his foundation, and that is that the Attorney General of New York State is conducting an investigation into what was paid in and out of his foundation accounts to see if any of such funds were paid out for illegitimate purposes under state law. The New York Times has already stated that he has dipped into such accounts for payment of private costs associated with his for-profit activities, a clear violation of the federal law, but I am unfamiliar with New York State law which would apply to such chicanery. I presume New York’s AG is familiar with such a statute and that it would cover conduct such as that of Trump in literally stealing from the disadvantaged for private gain.

If indicted by either federal or state prosecutors, or both, one would expect Trump to argue in his usual narcissistic no-fault fashion that it was his lawyers and accountants who did the dirty work and not him, but such a “I didn’t know about it” defense (if a defense) is undercut by his public bragging “the he is the one who writes the checks and that he knows everything that is going on in his businesses.” Of course, if such wrongdoing can be handled as we handle Wall Street big banks’ wrongdoing, then perhaps those who regulate supposed “not for profit organizations” will settle the matter civilly with his reimbursement of funds spent for personal use along with a fine. No big banking CEO or board member goes to jail while committing indictable crimes in the banking sector, so why pick on real estate promoters? Just assess a chump change fine, sign a no admission of liability document  as per usual, and move on.

I have often blogged that we will not clean up our banking mess until the jingle of handcuffs is heard in the boardrooms of the big banks, and I think the same can be said for people such as Trump and those in any business who fraudulently use foundation money as a personal goodie grab bag (aka larceny, or stealing). When you or I steal and are apprehended, we go to jail. Why are bankers and real estate promoters exempted from doing time, especially since on average they are stealing a lot more than you or I? Whatever happened to enforcement of the Equal Protection Clause of our Constitution?  GERALD      E

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