- Editor's Note: The words used in this headline aren't
mine. They were printed in online news outlets and spoken by numerous government
officials. Also, there are updates to "Mortgage Madness? Shriners:
Part 16" at the end of this article.
-
- I read the news today, oh boy.
-
- It was pretty frigging bad.
-
- And it's about to get worse.
-
- Way worse.
-
- Headlines from the past two weeks read:
-
- · Drunk driving Shriners injure 12 in Fourth of
July parade rampage
-
- · Man Admits to Stealing $60,000 From Osiris Shriners
-
- The drunk Shriner article is available at:
-
- http://www.thegiantnapkin.com/drunkshriners.htm
-
- It begins:
-
- "GREENVILLE, S.C.-Several members of a group of
Shriners performing in Greenville's Fourth of July parade lost control
of their comically tiny vehicles, injuring 12 onlookers. An investigation
after the wreck revealed the Shriners had a blood alcohol content of .11,
over the state's legal limit of .08."
-
- It ends:
-
- "The group of Shriners admitted to enjoying alcoholic
beverages prior to the parade but did not think anything of it. 'We didn't
think it was a very big deal,' said Ed White, Shriner street performer.
'Before a parade, we usually drink even more than that.'"
-
- The Shriner theft story was published June 26, 2007 in
the Wheeling News-Register and begins:
-
- "WHEELING - A 70-year-old Wheeling man admitted
Monday that he unlawfully obtained about $60,000 from the Osiris Shrine
and the International Order of Odd Fellows, Wheeling.
-
- James Kenneth White pleaded guilty to a charge of obtaining
money by fraudulent pretenses.
-
- Assistant Prosecutor David Cross told the court White,
while in a position to have access to organization checking accounts, stole
$31,670.92 from the Osiris Shrine between Jan. 2, 2001, and May 30, 2006."
-
- To make things worse, it appears that the Shriners' convention,
which was just held in Anaheim, California, may have been operated illegally.
Because of this, the Shriners may come under microscope of the California
Secretary of State, the California Attorney General, the California Franchise
Tax Board, the District Attorney for Orange County and the IRS.
-
- According to a report from the California Secretary of
State's (SOS) online data base, the status of the Imperial Council Session
of 2007, Inc., the "for profit" group that ran the convention,
is "suspended."
-
- The report can be seen here:
-
- http://kepler.sos.ca.gov/corpdata/ShowAllList?QueryCorpNumber=C2672479
-
- Officials from the SOS office in San Francisco explained
that:
-
- "The Imperial Council Session of 2007, Inc. did
not file a statement of information" and as of 12/21/06, "cannot
legally operate as a California corporation."
-
- Officials from the California Franchise Tax Board (FTB)
confirmed that the "Imperial Council Session of 2007, Inc." filed
as a "for profit" corporation and was suspended from conducting
business of any sort in California.
-
- "Suspension means that they lost their right to
do business in California," one FTB official said. "This means
that all contracts are voidable. The members could have attended for free
because the suspended business had no right to ask for any money. Additionally,
they have lost the right to their name and are liable for taxes on all
income."
-
- "This is very serious," said another FTB official.
"This means that they didn't file their statement of information for
at least two years, even though notices were sent out to the address reported
on their records." The "Agent for the Service of Process"
is listed as Robert F. Schauer whose recorded address is the same as a
Robert F. Schauer who is listed as a member of the California Bar Association.
-
- California Code states that if a corporation neglects,
fails or refuses to prepare and submit the required financial statements,
they are subjected to penalties. After the corporation fails to file the
required statement, the SOS mails a notice of that delinquency to the corporation.
If there is no response within 60 days after the mailing of the notice
of delinquency, the SOS then certifies the name of the corporation to the
Franchise Tax Board.
-
- Officials at the IRS Exempt Organization section stated
that "It is illegal for 'non-profit' and 'for profit' businesses to
operate together. They just don't go together. It's against the law."
Additionally, a third request for the tax returns of the "Imperial
Council Session" of 2006, 2005, 2004 and 2003 was recently emailed
to Shriner Director of Corporate Communications, Alicia Aargiz-Lyons, as
the first request for these returns was sent a year ago and remains unanswered.
The IRS has ruled that such requests must be answered in 30 days.
-
- "The decision to investigate and/or pursue a case
against the suspended corporation is usually made by the local DA,"
the FTB official concluded.
-
- The California Code states that in this case, either
California's Attorney General or the Orange County District Attorney can
bring an action to enforce penalties in the name of the people of the State
of California.
-
- Section 2207 of the California Code (a) states that:
-
- "A corporation is liable for a civil penalty in
an amount not exceeding one million dollars ($1,000,000) if the corporation's
officers, directors, managers or agents misstates or conceals or has misstated
or concealed from a regulatory body a material fact in order to deceive
a regulatory body to avoid a statutory or regulatory duty, or to avoid
a statutory or regulatory limit or prohibition."
-
- Past articles in this series have alleged that certain
"material facts" may have been "concealed" from or
"misstated" on the Shriners' tax returns, to include the Shriners
Hospitals for Children as well as temples and clubs that operate under
the temples. In fact, the IRS and Senate Finance Committee recently announced
that, for the first time in 25 years, reforms will be made to the exempt
organization tax returns or 990s in order to better enforce non profit
transparency, disclosure and accountability.
-
- Some of these reforms coincide with possible "concealed"
information that should have been reported on the Shriners' 990s including:
-
- · Charitable donations being used for multiple
personal mortgages for Shiners' top leaders and employees
-
- · Accounts receivable, i.e. mortgage payments,
from officers and employees of both the charitable and fraternal corporations
-
- · Mortgage satisfactions
-
- · Changes to bylaws
-
- · Charitable donations being used to settle malpractice,
sexual harassment, and discrimination lawsuits as well as liens, with one
amounting to $1,156,026.53, against the Shriners
-
- · Related organizations to include the Masons,
Knights Templar, Jesters, etc.
-
- · Lobbyists hired to work against the Sarbanes
Oxley Act of 2002 written to tighten up corporate accountability
-
- · Conflicts of Interest
-
- · Shrine leaders forming their own "for profit
"corporations, with a past comptroller using the Shriner's address
as his place of business
-
- · "Executive compensation" paid to Shrine
officers and directors consistently reported as "0"on most Shriner
tax returns.
-
- The following New York Times front page story, published
on March 19, 2007, describes:
-
- "More than 57 percent of the $32 million the Shriners
raised in 2005 through circuses, bingo games, raffles and a variety of
sales went to costs of the fraternity, including keeping temple liquor
cabinets full and offering expenses-paid trips to Shrine meetings and other
events."
-
- The article continues:
-
- "Shortly after becoming Cahaba's potentate in 2003,
Mr. Ballard drove to Decatur, Ala., to oversee the installation of new
officers at one of the temple's affiliated clubs, the Decatur Shrine Club,
which was known for a high-grossing bingo game every Tuesday night. As
Mr. Ballard was leaving, a club member handed him an envelope, which he
tucked into his blazer pocket, assuming it was a check. Instead, Mr. Ballard
said, 'It was $1,000 in cash.' It is customary for a temple's affiliated
clubs to contribute to the potentate to help defray his costs during his
year in office. What concerned Mr. Ballard was that the gift was made to
him directly, not through the temple, and in cash. 'It scared me to death
because I could have gone out and bought myself a new set of tires with
that money and no one would have ever known,' he said."
-
- This article can be found at: http://www.nytimes.com/2007/03/19/us/19shrine.html?
pagewanted=1&ei=5070&en=d71d5717ddc8b099&ex=1184040000.
-
-
- Royal Order of Jesters
-
- A quick word about the super secret Shrine group, the
Royal Order of Jesters. The Jesters are made up of top level Shrine leaders
who join by invitation only. The International Royal Order of Jesters,
Inc., filed a 501c3 charity return in 2005 that claims they were "Extending
Assistance and Good Cheer to Others. Providing a Museum for Items and Articles
of Mirth, Comedy and Laughter."
-
- A 501c3 charity cannot be a secret society whose members
join by invitation only, as this constitutes discrimination. The company
who built the Jesters new building describes it as an "office building"
instead of a "museum."
-
- The company's website is here:
-
- http://www.brandtconstruction.com/Royal%20Order%20of%20Jesters.htm
-
- Building photos are here:
-
- http://www.brandtconstruction.com/RoyalOrderJestersPhotos.htm
-
- The National Court of the Royal Order of Jesters filed
a 501c10 fraternal return in 2005. Both returns fail to list report executive
compensation under the "Statement of Functional Expenses," though
the fraternal return lists "Directors Expense" under the "Other
Expenses" category as $31,865. Both returns were signed by Alex Rogers,
who is listed as the person who keeps the books for both tax exempt groups.
He is also listed on the 501c3 charity return as "Executive Director."
-
- If you go here to http://freemasonrywatch.org/royalorderofjesters.html,
you will find a statement about the Jesters, an email from one "Sam
Houston," the contents of which have been confirmed by known Jesters
and a letter from a director of the Jesters stating:
-
- "The purpose of this letter is to inform you that
at a recent Board of Directors meeting of the Royal Order of Jesters, a
resolution was passed which directed the abolition of all Jester-related
bulletin boards and internet sites. The primary reason behind such action
was the desire of the Board to minimize to the extent possible our public
exposure or its access to Jester information."
-
- Many on the Imperial Divan are Jesters. The information
can be found here:
-
- http://www.shrinershq.org/Shrine/Divan/
-
- If you go here, http://www.taxexemptworld.com/, and click
on "Search by Name" and type in "Order of Jesters,"
you will find 19 pages of Jesters' groups, contact names and locations.
-
- Unusual Numbers
-
- Numbers reported on the Shriners' corporate tax returns,
as well as those on the Dorchester Shrine Club's financial statements (See
"Mortgage Madness? Shriners: Part 16"), seem to be "misstated"
and either need more explanation or investigation as they seem to be out
of whack and don't seem to support the groups' stated exempt purpose.
-
- For example, the Shriners Hospitals for Children 2005
tax return reports that:
-
- · $10,535,020 was spent on "Miscellaneous,"
at a rate of $28,863 a day
-
- · $12,545,873 was spent on "Utilities,"
at a rate of $34,372 a day
-
- · $59,589,434 was spent on "Supplies,"
at a rate of $163,258 a day
-
- · $41,643,512 was spent on "Outside services,
at a rate of $114,091 a day
-
- Were any of these outside services provided by Shriner
owned businesses?
-
- Part VII of the Shriners Hospitals for Children 2005
tax return asks for the "Relationship of Activities to the Accomplishment
of Exempt Purposes." The Shriners report their exempt purpose as:
-
- "To Assess Fraternal Members in Order to Offset
Hospital Costs."
-
- The "Analysis of Income Producing Activities"
totals $406,039,618, with the fraternal members contributing $2,028,165.
-
- The fraternal member's contribution amounts to 0.5% or
one half of one percent of the income that is supposed to justify the Shriner's
exempt purpose.
-
- Updates
-
- "Mortgage Madness? Shriners Part 16" can be
found here:
-
- http://sandyfrost.newsvine.com/_news/2007/06/16/784977-mortgage-
madness-shriners-part-16
-
- It describes how the Dorchester Shrine Club was blindsided
and overtaken by the Omar temple last September. The potentate removed
all the officers, suspended the club's bylaws and took over the club's
finances because:
-
- · The club's leaders had been warned "over
and over about the breeding ground of drugs, excessive drinking, fights
and the language"
-
- · The club's leaders had "totally disregarded
Shrine Law"
-
- · The club's officers had "totally disregarded
the Potentates directives"
-
- · The temple had "received letter after
letter and phone call after phone call after phone call complaining of
the immoral conduct" at the Dorchester Shrine Club
-
- · The club's officers allegedly refinanced the
mortgage numerous times without permission
-
- · The club's officers were allegedly delinquent
in their mortgage payments
-
- A letter from the ousted club president claimed that
he was not given a chance to review the complaints. Other club officers
confirmed that the mortgage had been paid on time and had not been refinanced.
-
- After the seizure, the club was ordered to pay off their
mortgage in one year.
-
- The tax exempt purpose of the Omar Temple, who now controls
the Dorchester Shrine Club, is described as:
-
- "Fundraising events for the support of the Shriners
Hospitals for Crippled and Burned Children."
-
- The May, 2007 Dorchester Shrine Club financial statement
reports that:
-
- In the month of May, $4,075 was spent on the mortgage
and $48 was spent on the hospital.
-
- In other words, $131.45 was spent per day on the mortgage
and $00.01.5 (one and one half cents) was spent on the hospital or one
and one half cents was spent a day to support the temple's exempt purpose
while $131.45 was spent a day on the mortgage.
-
- The annual totals for 2007 are $13,606.31 spent on the
mortgage and $465.75 spent on the hospitals.
-
- In other words, $273.72 was spent per day for the mortgage
and $00.01.9 (One and nine tenths cents) was spent on the hospitals to
support the temple's exempt purpose.
-
- Additionally, the latest Dorchester Shrine Club newsletter,
the Infomar, asked for volunteers to help with a golf tournament, the proceeds
of which are earmarked to pay off the mortgage. A letter from Noble Julian
Seal, DSC Appointed Board of Advisors, Chairman, states that "Please
think about some of this and help (the Dorchester Club Annual Golf Classic)
so that we can pay off the debt of the club in 2007." The flyer states
that "Proceeds Support Shrine Activities," which may be misleading
because Shrine fundraising directives order that fraternal fundraising
materials must state: "Proceeds are for the benefit of Dorchester
Shrine Club activities."
-
- The same newsletter may provide the answer as to why
the Omar Temple overtook the Dorchester Shrine Club last year.
-
- "Greetings from the President," by appointed
DSC president, Bill Ackerman, states: "One quick announcement; the
Omar Director's Staff is looking for a new home. We are working with them
to see if we can accommodate them. It looks very promising. Please make
them feel welcome and answer their questions if asked. It is requested
that these discussions not dwell on past negative aspects of our club's
history but rather, build on the positive emergence of our club into a
successful, functioning, philanthropy that will come closer to meeting
its duties and responsibilities to Shrindom. If they decide to accept our
requirements then it will be as regular DSC members with the same rights
and privileges of any other member."
-
- When the Director's Staff moves from the Omar Temple
to the Dorchester Shrine Club's 75 acre site, they will add an extra 25
voting members to the Dorchester Shrine Club. Once the club is allowed
to vote again, the Director's staff will be the majority vote.
-
- Additionally, a "gag order" of sorts was issued
by Ackerman in regard to the Director's Staff move to the Dorchester Shrine
Club. It reads:
-
- "During this time, it is requested that if you have
concerns or want to make your personal feelings known, please express them
to your governing body in private. Your questions and concerns will be
handled in a very businesslike manner with honest and sincere responses
whenever possible. There may be short periods of time when it may be difficult
to us to give you an immediate response. We will answer you as soon as
we know the answer and can publicize it. Please don't feed or get caught
up in the 'rumor mill.' Please don't ask your governing members or any
other member to conduct sensitive club business of any kind in the public
forums of our club. The place for these discussions is in a sober, business
environment out of the public eye. It will take several months to finalize
the partnership. We want to make sure that this partnership is beneficial
for all involved."
-
- So, who is harmed by all of this?
-
- The children. Twenty years ago, the Orlando Sentinel
described how the children were being used for fundraising that was shortchanged
by alleged circus ticket theft. Complaints were made to two law enforcement
officers who failed to report the crimes. They were Shriners. How many
more children could be helped if these groups' expenses supported their
exempt purposes?
-
- The Donors. They trust that their tax deductible contributions,
trust funds, estates and bequests are going to help the children. What
would they do if they knew that their donations were being spent on mortgages,
lawsuits, lavish ceremonies, liens, unreported lobbyists, unreported expense
accounts, and supplies at a rate of $163,258 a day?
-
-
- Other charity groups. They want to tell others about
their good works as they uphold the highest standards of non profit transparency,
disclosure and accountability. Instead, the public's trust in these groups
is shaken as the headlines describe fraud, sex-scandals, drunkenness and
corruption associated with groups such as the United Way, the Red Cross,
the Smithsonian and, now, the Shriners.
-
- The tax payers. It is the taxpayers who must make up
for what the tax exempt groups do not pay. For example, both Shrine fraternal
and charitable share the same headquarters in Tampa, Florida where the
Hillsborough County property tax assessment is over $450,000. Since both
groups are classified as tax-exempt, they don't pay any property tax.
-
- The United State Department of Revenue and the IRS exempt
organization section. These agencies rely on accurate information to justify
the conditional tax exempt status enjoyed by groups like the Shriners.
An April 5, 2005 Chronicle of Philanthropy article, "Nonprofit Abuses
Cost Federal Government Billions of Dollars, IRS Chief Tells Senators"
states:
-
- "'Abuses by nonprofit groups and donors are costing
the federal government about $15-billion a year in lost revenue,' Internal
Revenue Service commissioner Mark W. Everson told a Senate committee today.
-
- The members. The average Shriner has no idea about any
of this as they continue to faithfully drive patients and their parents
to any of the 22 Shriner Hospitals for Children so they can get medical
care at no cost. Or get up early on a Saturday to set up for a pancake
breakfast. Or dress up like a clown to visit the sick and crippled children
and put a smile on their faces.
-
- The whistleblowers. Whistleblowers are protected from
retaliation by a portion of the Sarbanes-Oxley Act of 2002. Unfortunately,
these Shriners have been sued, suspended, intimidated and censored for
asking financial questions that the Shrine leadership, from the bottom
all the way to the top, refuses to answer.
-
- Maybe those in the offices of the California Attorney
General, California Franchise Tax Board, the Orange County District Attorney,
California Secretary of State and the IRS are the only ones who can get
answers to those financial questions that remain unanswered.
-
- If they don't, who will?
-
- All copies of material reprinted or duplicated from by
Sandy Frost must include the following credit line: From http://sandyfrost.newsvine.com/
Copyright © 2007 by Sandy Frost. Used by permission.
-
-
- Visit Sandy at:
- http://sandyfrost.newsvine.com/
- http://thecassandrafrostcollection.blogspot.com/
-
- Previous Shriner Articles By Sandy Frost
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