[EL] CREW's "Inurement" complaint might blow its own whistle

[BZall at aol.com]

Seriously, this must be a joke. Or a publicity stunt by people who don't  
actually work in this area. Sounds sexy (in a media way), and tries to 
strangle  someone CREW really doesn't like (making donors happy), but CREW may be  
surprised by what happens now. 
 
 
Did no one see the automatic "excess benefit transaction" under IRC  
Section 4958 involved when a 501(c)(3) organization - in this case CREW - spends  
charitable resources to file a whistleblower complaint asking for $2,000,000 
for  its Executive Director - personally?  
 
This is a complaint about "private inurement," but the  complaint itself is 
classic inurement, with Sloane as the person to whom  the benefit could 
inure. John Marshall Law School, People of  God Community, all the classic 
inurement cases fit here. How is this at all  different from Airlie Foundation 
(inurement from Executive Director's  use of charity's assets for his own 
home)? Who counseled CREW that this was  a good idea? Perhaps they thought 
there wouldn't be a problem because the  IRS almost never pays these awards 
(actually, that's true, so maybe it was a  good bet). But that bet itself might 
be a Circular 230 violation under the  newly-announced standards. 
 
Every ED has a story about how giving them personally the benefit of  
something the organization does is really a good thing. I guess this is one of  
those. But the common defense is something called the "incidental" doctrine,  
based on G.C.M. 37789 (1978), which says that the organization needs to do  
something to "benefit the public" and fulfil its tax-exempt purposes, and  
any benefit to the individual is purely "incidental" to the organization's  
benefit. Was "getting Bopp" considered such a wonderful thing for the  
organization that it didn't matter that the beneficiary of the charity's  work 
was an insider? But really, is this an "incidental" situation? Read the  IRS's 
own internal training description. 
http://www.irs.gov/pub/irs-tege/eotopicc90.pdf 
 
Probably not. More likely, just a publicity stunt, with an interesting  
kicker. Someone needs to file a whistleblower complaint against CREW. Looks  
pretty straightforward here. At least as straightforward as their claim 
against  Bopp. To quote their own press release: "Misusing a non-profit for 
personal gain  is a serious offense and merits a thorough investigation.”

Barnaby Zall 
Of Counsel 
Weinberg, Jacobs &  Tolani, LLP 
10411 Motor City Drive, Suite 500
Bethesda, MD  20817
301-231-6943 (direct dial) 
bzall at aol.com  
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In a message dated 7/9/2013 12:39:19 P.M. Eastern Daylight Time,  
rhasen at law.uci.edu writes:

_“CREW Executive  Director Files IRS Whistleblower Complaint Against 
Campaign Finance Lawyer  James Bopp”_ (http://electionlawblog.org/?p=52714)  
Posted  on _July 9, 2013 8:23 am_ (http://electionlawblog.org/?p=52714)  by 
_Rick Hasen_ (http://electionlawblog.org/?author=3)   
 
_Press  release_ 
(http://www.citizensforethics.org/legal-filings/entry/melanie-sloan-irs-whistleblower-complaint-james-bopp) : 
Today, Melanie Sloan, Executive Director of Citizens for Responsibility  
and Ethics in Washington (CREW), filed a whistleblower complaint with the  
Internal Revenue Service (IRS) against James Bopp, Jr., the Bopp Law Firm,  and 
the James Madison Center for Free Speech (JMCFS). 
The complaint alleges Mr. Bopp and JMCFS, a tax-exempt 501(c)(3)  
organization, misrepresented their activities to divert virtually all of  JMCFS’s 
money into the Bopp Law Firm for Mr. Bopp’s personal  enrichment.  
Additionally, CREW asked the Indiana Attorney General, the  U.S. Attorney for the 
Southern District of Indiana, the Indiana Secretary of  State, and the D.C. 
Department of Consumer and Regulatory Affairs to  investigate.
I have been _quite critica_ (http://electionlawblog.org/?p=16497) l of 
earlier  attempts to go after Jim Bopp personally for activity which campaign 
reform  groups don’t like.  We’ll see if there’s anything more substantial to 
 these new allegations. (For background on the controversy, see _this  
Slate piece_ 
(http://www.slate.com/articles/news_and_politics/jurisprudence/2012/10/james_bopp_jr_s_unusual_relationship_with_the_james_madison_center_.singl
e.html) –not by me.) 
UPDATE: Peter Overby _tweets_ 
(https://twitter.com/peteroverby/status/354634146255089665) :  “Cmpn fin rumble! _ at CREWcrew_ 
(https://twitter.com/CREWcrew)  holds  tele-conf to accuse Jim Bopp (Cits United) of violating 501c law. 
Bopp crashes  call & attacks  CREW.”


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