Madoff could become a folk hero before this is all said and done.
He has opened a can of worms that needed scrutiny for quite some time:
The IRS has asserted that tax-exempt non-profits ("foundations and charities") are the locus classicus for IRS fraud.
Investigators may be looking at the legal parameters of prosecutable crimes including making false statements to state and federal officials, filing falsified documents, obstruction of proceedings before state and federal agencies, fiduciary negligence, and obstruction of US justice.
The N/P's might have facilitated IRS fraud by integrating:
1. Secret control over N/P fund-raising committees.
2. Requiring only one signature on tax-exempt N/P bank checks.
3. Utilizing pre-signed tax-exempt N/P bank checks.
4. Using secret bank accounts to keep secret the actual financial position of tax-exempt N/P's.
5. Assigning bank deposit and account reconciliation functions of tax-exempt N/P's to one person.
6. Conspiring to hide oversight of expenses and supporting vouchers from public view.
7. Having no outside auditor to review tax-exempt N/P's statements.
8. Cashing unusually large amounts of tax-exempt N/P checks.
9. Having no official tax-exempt N/P deposit and withdrawal control system.
Authorities should investigate the Madoff-invested N/Ps US Postal Service mailings, wire transfers, computer transfers, electronic submissions, and unregulated money transfers, and all bank transfers connected to secret tax-exempt non-profits bank accounts.
Fraudulent tax-exempt non-profit activities might have involved using checks passed from one account to another in multiple conspiracies to launder monies.
The stratagem could have been international in its scope due Madoff's worldwide connections.
Authorities need to determine the extent to which donors to Madoff-invested N/P's colluded in schemes that may have included misusing reserve bank accounts, concealing transfers, inflating asset values and improperly accounting for transactions.
A formal inquiry should be conducted into the Madoff-invested N/P's and their financial activities with officers of publicly-held companies) including
(1) Enron-style accounting frauds by manipulating N/P records,
(2) bundling contributions into the pockets of politicians,
(3) the extent to which networks of companies are financing political candidates in the names of business partners without their knowledge or consent,
(4) the extent to which officers of publicly-held companies used accounting fraud to hide illegal campaign contributions, and,
(5) the extent to which campaign donations exceeded campaign-finance limits.
Charges might include Madoff-invested N/P's accounting managers misappropriating funds to cover personal expenses, fraudulently overcharging for management services, diverting non-profit funds, then converting them to campaign accounts, or in the style of WorldCom greed spending thousands of non-profit dollars on organization credit cards for personal expenses.
A formal inquiry should be undertaken with respect to the Madoff-invested N/P's relatives, associates, co-conspirators or subsets of them, and donors (particularly officers of publicly-held companies), the business dealings between recipients, employees and elected and appointed officials and the extent to which influence-peddling is taking place, and more specifically the extent to which relatives, associates, and principles of the Madoff-invested N/P's and co-conspirators or subsets of them, directed political activities from tax-free non-profit organizations in illegal arrangements.
The BIGGEST FRAUDS are between N/P and N/P.....writing checks to each other (
which is the MO for laundering tax-exempt monies).
Authorities need to determine the extent to which the Madoff-invested N/P's manipulated philanthropic transactions, such as:
(1) loans, the
(2) sale,
(3) exchange or
(4) leasing of property to related organizations, and donors, and the extent to which organizations reported
(5) "excess benefit transactions" on Form 990, and,
(6) the extent to which executive pay was properly accounted for with the IRS.
The Madoff-invested N/P's need to reveal the dimension of contributions these organizations that may have been illegally redirected to political activity and be requested to explain:
(1) how the Madoff-invested N/P's solicit non-profit contributions,
(2) how non-profit donations are made, and,
(3) the manner in which donors to the Madoff-invested N/P's, particularly officers of publicly-held companies allocated company assets.
The Madoff-invested N/P's should be asked for details about who inside, and outside, these organizations is soliciting contributions, how the various subcommittees are funded, and the extent to which the Madoff-invested N/P's their donors (particularly officers of publicly-held companies) are colluding to perhaps finance political campaigns surreptitiously, and are engaging in other illegal transactions.
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Rocky Mountain News:
On Monday morning, Crane sent an e-mail to people at nearly 150 groups around the country that count on his foundation for $25 million to $30 million of funding each year. The checks they had been expecting would not be coming, he told them, and JEHT would close by the end of January.
The money for JEHT came from Mr & Mrs Levy-Church. The late father of Mrs Levy-Church had a foundation managed by Madoff. There was about $250 million in the foundation.
JEHT FOUNDATION INTERNATIONAL JUSTICE GRANTS
List of active international justice grants of the JEHT Foundation:
Organization NameAmount of GrantYear Grant Was MadeDuration of Grant
$15,000 2004 1 year Advocates for Environmental Human Rights $450,000 2005 3 years
Altus Global Alliance $300,000 2004 18 months
American Civil Liberties Union Foudation $600,000 2006 3 years
American Civil Liberties Union Foundation $500,000 2004 1 year
American Civil Liberties Union Foundation $350,000 2004 2 years
American Civil Liberties Union Foundation $300,000 2007 1 year
American Public Media $80,000 2007 1 year
American Society of International Law $151,800 2005 18 months
American Society of International Law $140,500 2007 18 months
American Society of International Law $125,000 2008 1 year
American University, Washington College of Law, War Crime Research Office $103,000 2004 1 year
American University: Center for Human Rights and Humanitarian Law $83,365 2005 9 months
Americans for Informed Democracy $10,000 2006 3 months
Americans for Informed Democracy $65,500 2007 1 year
Amnesty International USA $250,000 2004 1 year
Amnesty International USA $300,000 2007 1 year
Amnesty International USA $250,000 2004 1 year
Amnesty International USA $1,000,000 2005 3 years
Aspen Institute $160,000 2005 1 year
Aspen Institute $324,570 2006 2 years
Brandeis University: The International Center for Ethics, Justice and Public Life (ICEJP) $600,000 2005 3 years
Brandeis University: The International Center for Ethics, Justice, and Public Life $600,000 2008 3 years
Business and Human Rights Resource Center $100,000 2006 2 years
Campaign for Innocent Victims in Conflict $150,000 2006 3 years
Center for Constitutional Rights $325,000 2007 2 years
Center for Constitutional Rights $37,500 2004 4 months
Center for International Environmental Law $600,000 2006 3 years
Center for Investigative Reporting $300,000 2006 1 year
Center for Justice and Accountability $450,000 2006 3 years
Center for Public Integrity $316,000 2005 1 year
Center for Public Integrity $900,000 2008 3 years
Center for Public Integrity $107,000 2007 6 months
Citizens for Global Solutions $250,000 2006 1 year
Coalition for International Justice $75,000 2004 1 year
Coalition for International Justice $60,000 2005 6 months
Columbia Law School: Human Rights Institute $90,000 2006 1 year
Community Foundation of Greater Greensboro $150,000 2004 2 years
Crimes of War Project $60,000 2004 1 year Crimes of War Project $23,400 2007 2 months
Crimes of War Project $60,000 2005 1 year Crimes of War Project $200,000 2008 2 years
ETV Endowment of South Carolina: Hedrick Smith Productions $75,000 2005 3 months
EarthRights International $200,000 2005 2 years
EarthRights International $325,000 2008 2 years
European Center for Constitutional and Human Rights $49,600 2007 1 month
Harvard Law School: International Human Rights Clinic $43,261 2006 7 months
Harvard Law School: International Human Rights Clinic $118,000 2008 1 year
Harvard University: Program on Criminal Justice Policy and Management, Kennedy School of Government $768,739 2005 3 years
Heartland Human Care Services, Inc.: National
Immigrant Justice Center $720,000 2008 3 years
Human Rights First $100,000 2002 7 months
Human Rights First $1,500,000 2005 3 years
Human Rights First $350,000 2004 1 year
Human Rights Watch $225,000 2002 1 year
Human Rights Watch $250,000 2004 1 year
Human Rights Watch $500,000 2005 2 years
Human Rights Watch $1,000,000 2007 3 years
Human Rights Watch $172,500 2007 1 year
(continued)
