Thursday, July 26, 2012

Clark Durant and Daughter Siphoning Funds Through Sham Charity


From The Michigan Democratic Party:
Over 95 Percent of “Charity’s” Funds End up in Durant, Daughter’s Pocket; MDP to File IRS Complaint and Call for Investigation
LANSING – According to publicly available records, Clark Durant and his daughter are unlawfully misusing a charity connected to Detroit’s Cornerstone Schools for their own personal gain. The charity, Genesis Foundation, was originally formed to help educate children in Detroit, but the Detroit Free Press found that in recent years the charity has done little other than pay Durant and his daughter exorbitant compensations. Subsequent to the Free Press story, the MDP has found that 95 percent of the charity’s funds go directly into Durant family pockets.
KEY FINDING:
From 2009 to 2011, Durant and his daughter siphoned almost $1.4 million from the Genesis Foundation, a private charity founded in 1991 by Durant as a “sponsor-a-child” organization to help children in Detroit afford private school.
Statement from Mark Brewer, Chair of the Michigan Democratic Party:
“Clark Durant claims to be a rebel with a cause, but it turns out he’s siphoned off almost $1.4 million from a charity originally created to help Detroit kids afford school. It’s clear the only cause Durant cares about is his own. 
“A man who unlawfully abuses charities and foundations for personal gain is not the kind of ‘rebel’ Michigan families need.”
Legal finding from Tammie Tischler, an independent attorney specializing in non-profit and tax law:
“Based on the documents we have reviewed, The Genesis Foundation appears to be a complete sham organization used for the single purpose of paying Clark Durant and his daughter, Hope Loomis, more than $600,000 per year. 
“Large donations are made by two donors, and the tax returns show those funds go directly to Durant and Loomis in the form of compensation. Non-profit law prohibits the use of charitable assets for the private interests of founders, family members and board members. This is a blatant violation of the laws governing non-profit organizations.”
MDP LAUNCHES WEBSITE TO CHRONICLE DURANT’S ABUSE:
The Michigan Democratic Party today launched a website, www.ClarksCharityScam.com, to chronicle Durant’s history of charity abuse. Durant’s personal financial disclosure documents and publicly available non-profit filings can be found on the website.

DURANT’S VIOLATIONS OF THE LAW:
Durant and his daughter’s actions are unlawful with respect to at least two laws governing the behavior of charities and, specifically, private foundations.
  • Self-Dealing: The first is “self-dealing,” which involves the payment of compensation by a private foundation or charity to “disqualified persons.” Durant and his daughter both fall into the disqualified person category because of Durant’s position as President and founder of Genesis.
  • Private Inurement: The second violation is “private inurement,” which prohibits the use of charitable contributions for the benefit of individuals associated with a foundation. The compensation Durant and his daughter receive violates private inurement laws.
PENALTY FOR BREAKING TAX LAW:
  • The IRS can impose an initial penalty equal to 25 percent of the unlawful compensations, as well as require Durant and his daughter to repay Genesis Foundation the full amount they have unlawfully taken. If Durant and his daughter do not repay the foundation within the time frame set by the IRS, Durant and his daughter would be subject to an additional penalty equal to 200 percent of the prohibited compensation. [IRS, Taxes On Self-Dealing, accessed July 16, 2012]
  • Further, organizations that engage in this unlawful behavior can be stripped of their non-profit status. [Board Source, accessed July 11, 2012]
GENESIS FOUNDATION TIMELINE:
The “sponsor-a-child” foundation was inactive from 2001 to 2008. In 2008 Durant reopened Genesis with a new mission. Genesis now exists for the sole purpose of compensating its founder and President, Clark Durant, and his daughter, Hope Durant Loomis. According to records, 95 percent of Genesis Foundation revenue has gone to Durant and Loomis, in a gross violation of non-profit and charity law.
Read Tischler’s opinion by visiting the following link:
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