Thursday, July 26, 2012

Nissenbaum Law Blog: May a Texas Nonprofit Organization Use ...

In December 2011, Texas Attorney General Greg Abbott (?Abbott?) sued the Texas Highway Patrol Association (?THPA?), the Texas Highway Patrol Museum, THPA Services, Inc. and several senior THPA officials (collectively ?THPA and Affiliates,? separately ?Affiliates?).? The suit claimed that THPA and Affiliates defrauded charitable donors by illegally soliciting donations under the false pretense that the contributions would be used to benefit the families of slain state troopers.? Instead, state investigators found that few survivors actually received financial assistance from THPA and Affiliates, and the money went toward personal use such as meals, movie theater and amusement park tickets and unauthorized association credit card charges for travel for officials and their family and friends.?

THPA and Affiliates received up to $10,000.00 a day and they could not produce receipts for their expenditures that evidenced business related transactions.? While the organization had raised approximately $12,000,000.00 in donations within five (5) years, only a reported $63,500.00 was given to the families of fallen state police officers.?

Some THPA officials gave employees excessive compensation and used donations to pay for personal vehicles.? Although THPA officials told investigators that the cars were for business, the insurance policy listed the purpose of the vehicles as being for pleasure.?

The lawsuit also charged THPA and Affiliates with falsely claiming that they were a tax-exempt, charitable organization registered with the Internal Revenue Service (?IRS?).? THPA was a nonprofit business league, not a charity.

THPA and Affiliates also face civil penalties under the Texas Deceptive Trade Practices Act for falsely claiming that they are associated with the Texas Department of Public Safety (?DPS?) and its highway patrol division.? Neither the THPA nor its Affiliates are associated with the DPS.

The Travis County Probate Judge Guy Herman appointed a temporary receiver and froze THPA?s assets at $490,000.00.? The total amount of money improperly used was not acknowledged in the suit because Abbott plans to make that a part of the ongoing investigation.? The suit has not yet been adjudicated.

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Source: http://www.nissenbaumlawblog.com/2012/07/may-a-texas-nonprofit-organization-use-charitable-donations-for-personal-use.html

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