Posted on 01/20/2020 4:54:26 AM PST by Kaslin
If you raise money for a nonprofit, but don’t finish all of the projects you were raising it for, you could go to prison for 10 years. This is no exaggeration. This is what happened to former Rep. Steve Stockman of Texas. Earlier this month, the Fifth Circuit Court of Appeals upheld a conviction against him for that very reason. Two of the three judges on the panel were Obama appointees. The third judge, who wrote the opinion, is 82 and was so ill he never showed up for oral arguments. Shockingly, he wrote a politically charged opinion, evidenced right in its sarcastic opening statement, making light of a serious case impacting a man's life.
Stockman was a very outspoken conservative congressman who appears to have been targeted by the left through the legal system. But this ruling sets a chilling precedent for nonprofit c3s and c4s of all political stripes. This terrible decision, which ignored several of its own Fifth Circuit precedents, could be used against Democratic nonprofits just as easily.
What happened was Stockman raised $285,000 in 2010 for the Ross Center, a 501c3 which he controlled. He told the donor, Stanford Z. Rothschild, Jr., that the money was to go to voter education for Jewish voters in Florida as well as a fundraiser. Meanwhile, he received a salary from the Ross Center — nothing odd about that. The Fifth Circuit opinion ignored the work he’d done related to the project, which included making a book and the fact the money was legitimately spent on a fundraiser.
Instead, they claimed he misused the funds, because he chose to spend his salary on personal items for himself. But how he spent his salary was his own business. The opinion deliberately left out the fact he was spending money from his salary in order to come to its twisted conclusion. The judge wrote, “He quickly diverted donor money to personal and political projects having nothing to do with philanthropy or education (emphasis added).” Even more dishonestly, the court looked at credit card statements from four years before the donations were even made to find personal expenses!
Again in 2011, Rothschild offered to donate money to be used for voter education. He contributed $165,000 to the Ross Center and to another nonprofit Stockman ran, Life Without Limits. Again, Stockman paid himself a salary and used it on various personal items, including a loan to his political campaign.
In 2013, businessman Richard Uihlein offered to contribute $350,000 for projects by the Congressional Freedom Foundation. The prosecution honed in on the fact that one part of the project, obtaining a house called “Freedom House,” was not completed. And yet again, the Fifth Circuit opinion poured over the personal items that Stockman spent his separate salary on.
In 2014, Uihlein gave $450,571.65 to the Post Office in order to send out an educational mailer for Stockman’s political campaign. They mailed fewer than planned, but that’s common, and applied funds raised to other legitimate nonprofit costs as well. The Fifth Circuit admitted in its opinion, “The 2014 Uihlein funds were used to print and distribute hundreds of thousands of copies of The Conservative News.” About half of the money was spent on that. But since the direct mail portion ended up not taking place, the court claimed it was a fraudulent scheme. The court also falsely wrote in its opinion that Uihlein wrote his check to one of Stockman’s nonprofits, and said that Stockman called off the mailing. The truth is the vendor could not complete the task because his shop could not handle that much mail.
Stockman was convicted of merely process crimes which are meant to pile on, and crimes that normally are handled civilly by correcting a filing. Wire fraud and mail fraud simply mean the person used the mail and the telephone while they were committing crimes. Money laundering means there was money involved in the crimes. The campaign counts and tax return count should have never risen to the level of a crime, Stockman should have been allowed to correct the filings civilly as most people are.
The Fifth Circuit opinion allowed the trial court’s misleading description of 501c3s and 501c4s in the jury instructions to stand. The jury instructions were confusing and gave the jury only a partial understanding of what nonprofits can and can't do with donations.
The trial court also used an unfair standard to convict Stockman of violating campaign finance laws. Stockman did not set up an excessive contribution to his campaign because The Conservative News mailer wasn’t “express advocacy” so it did not constitute a contribution.” The literature didn’t say “vote for” or that kind of clear advocacy language, it was merely educational. But the trial court confused the jury into thinking it was express advocacy. According to the government’s own case agent, FBI Agent Spencer Brooks, The Conservative News did not contain any “express advocacy.”
There was no precedent until recently for turning the alleged campaign violation of a coordinated contribution into a crime. The appeals panel, however, chose to disregard its own circuit precedent about independent expenditures, and therefore reached an egregious and unprecedented result on the campaign finance issue. Political speech has First Amendment protections, and regulation must be narrow. The opinion didn’t even mention the First Amendment. This should terrify any nonprofit that gets close to any political campaigns.
The Fifth Circuit’s opinion is written sarcastically, mocking Stockman, who has now been languishing in a prison cell for over two years. Stockman did not implement “a scheme to deprive two donors of their money and property.” The donors knew exactly what their money was going to and approved of it. Rothschild admitted afterwards that he thought his money had been adequately spent. Unfortunately, he passed away before he could be called to testify at trial.
One of the key witnesses for the prosecution, Ben Wetmore, has subsequently said Stockman is innocent. He has gone over all of the charges against Stockman and explained why they were wrong.
Stockman has an impeccable background with no criminal convictions until now. The DOJ is out of control and it’s unfortunate President Donald Trump has not been able to clean it up yet. Left wing prosecutors targeted and overly prosecuted Stockman in order to send a message to outspoken conservative elected officials: Back down or you will pay. Convicted murderers have served less than 10 years in prison. Let’s hope wiser heads at the U.S. Supreme Court agree to take this case. Alternatively, Trump needs to pardon Stockman.
Pity one can’t get a criminal conviction for politicians who say they will “reduce crime” or other such, and then fail to do so. (Not that politicians ever knowingly lie, or anything like that.)
Prison? Only if you are NOT one of the (Dem) elite...
Non-Profit: where the money over and above your expenses is called something else.
But in reality, it’s still profit.
yet the Clinton Foundation WALKS free.
he should have hired Comey’s brother to do his taxes.
Next: the Clinton Foundation. But I’m not holding my breath.
The PIAPS should be shaking in her colostomy bag over this
The swamp reigns supreme.
Our nation is under the control of the global socialists and they will use the system to destroy anyone who opposes them, regardless of precedent or law.
Trump can only do so much. The swamp cannot be drained in 8 years. It just cannot happen. The left has had decades to infest our government with active and sleeper agents.
We are only now seeing the tip of the iceberg they have waiting for us all.
People need to understand that “non-profit” is a tax term. That’s it. It has nothing to do with morality, or volunteerism, or helping your fellow man, etc. It’s a tax term and tax status. And tax statuses come with rules. If you don’t like the rules, don’t apply for the status.
I had a friend that jumped through a ton of hoops to finally get the status. But after working under it for a short time, he abandoned it. It wasn’t worth the government involvement and ongoing requirements.
Tyranny.
Ah, no—using the nonprofit code to redirect the bulk of funds to yourself in salary, while insignificantly contributing to your chosen “cause” is not okay.
Ten years in prison is ridiculously steep and of course we don’t want to compare it to all the Clinton Foundation-type fraud, etc. And the left gets away with this crap all the time while going after the right.
But that still doesn’t make it okay.
The legal status for a nonprofit is supposed to be that you are essentially the custodian of an entity for the public good, because with the tax breaks given the public is helping to fund it.
Yes, I understand that, but at the end of the day, all it really is is a tax status. And a danged restrictive one. Some people make very, VERY good money working for “non-profits”.
Isn’t the NFL a non-profit?
Aren’t Microsoft and Apple entities for the public good? They employ a LOT of well paid people and bring life changing products to the public.
As one guy said, Apple has helped a LOT more people than Mother Teresa did.
I’ll have to look at the facts closely on this one, but I am never comfortable with the idea of having a member of Congress getting paid exorbitant salaries while working for multiple non-profit organizations like this. This arrangement is a perfect opportunity for “legal” bribery.
The whole concept of nonprofits in this country is a pretty smelly business. There is a nonprofit that is attempting to take over maintenance of the city parks here in Pittsburgh. It has a paid staff of 38 and its CEO makes an annual salary of $210K. UPMC claims to be a nonprofit while it holds a virtual monopoly on medical care in this region.
Nonprofit. Riiiiiiiiiiiiggggggggghhhhhhhhhhttt!
What about the Clinton Foundation and all the money they stole from the people of Haiti? Does that fall under the same rules? Now Harry and Megan have set up a CF style foundation that he is president if and she is VP of. This is how they will continue to support their princely lifestyle now that they are no longer receiving any support from the British subjects, living in the Vancouver mansion was th security provided by Canadian subjects facilitated by Trudeau.
Yes there is. This is exactly what "the swamp" is. Maybe he was targeted because he is conservative and that is wrong. But this type of thing is part of the "I scratch your back; you scratch mine" mentality that creates the swamp. Do it at your own peril.
Ah, no—using the nonprofit code to redirect the bulk of funds to yourself in salary, while insignificantly contributing to your chosen “cause” is not okay.
Did I miss something here? Where in this article does it say anything about the ‘bulk of funds’ going to his salary?
‘Rothschild admitted afterwards that he thought his money had been adequately spent.’
Apparently, the main donor was happy.
I also noticed that missing from the article was how much the salary actually was. Makes me suspicious. If it was a small percentage then that is a different story than if it was a significant percentage. Does it say anywhere how much the salary was?
Recently set up a scholarship fund in name of dear departed friend...NO WAY will it be non profit! And the fund doesn’t care what a parents income is, either.
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