Posts Tagged ‘IRS’

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Suspicious financial actors: recommended reading

March 20, 2014

Thanks to El Grillo, Pulp Ark, and all those tweeting out good tips:

  • CAIR, an co-conspirator in the HLF terror finance case, is complaining about a Minnesota bank that closed suspicious accountsmore>>
  • The IRS is employing a man who tipped off an Al Qaeda suspect… more>>
  • US Rep. Gerry Connolly (D-Va) will appear at a fundraiser sponsored by Muslim Brotherhood supporters… more>>
  • Even people with criminal records can “buy” EU citizenship for £150,000, and all the benefits that entails… more>>

 

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For-profit halal board claims tax-exempt status

January 24, 2012

Wahhabi-backed U.S. halal certifier pays top officers 6-figure salaries, gets $5 million in business income, claims public charity status

If a food manufacturer wants to call its products halal, and obtain a label that attests to its halal compliance, that manufacturer must submit an application for review by a halal certification organization.

In the U.S., halal certifiers are not government entities and, unlike organic food certifiers, are not accredited by the government.  The halal boards are privately run.

One of the largest halal groups is the Islamic Food and Nutrition Council of America (IFANCA), a Chicago-based multi-million dollar enterprise.  But as Family Security Matters has noted, “There are very few transparent news reports of the expansion” of the halal industry in North America.  The time has come for fuller scrutiny.

First, IFANCA proclaims on its own website that it is recognized and endorsed by the Saudi-based, Wahhabi hegemon Muslim World League.  The MWL has funded Al Qaeda, Hamas, and other terrorist organizations throughout the world in an effort over several decades to export and ingrain Wahhabism across the planet.  But this doesn’t seem to bother IFANCA.

Second, IFANCA claimed tax-exempt status in its 2010 tax return even though the vast majority of its reported revenues comes from “inspection fees.”  These are fees that IFANCA charges to food producers for the “privilege” of sporting IFANCA’s halal food logo.  Such fees sound a lot more like ordinary business income that should be taxable rather than charitable or “public” contributions which would qualify the entity for tax-exempt status.  IFANCA’s Form 990 showed $5,519,829 in inspection fee revenue.  Its only other reported revenues were $14,466 in gifts.

To qualify for tax-exempt status, a charity needs to get over one-third of its income from donations or grants and no more than one-third of its income from business activity.  With 100 percent of its income from apparent business activity, IFANCA falls far short of federal standards for a nonprofit charity.  (IFANCA’s six-figure salaries to its president and vice-president documented in its tax returns may also raise a few eyebrows.)

IFANCA casts itself as an educational entity of sorts, promoting “knowledge” and “community development” with respect to halal foods.  But it does not base its claim for public charity status on its educational or religious mission, but rather by describing the inspection fees as public contributions.

IFANCA’s tax approach makes it relatively unique among food certification groups such as organic, vegan, and kosher certifying entities.  Several U.S. organic food certifiers are tax exempt on the bases of Section 501(c)(5) of the Internal Revenue Code because they have an agricultural mission—not on the basis of any professed public charity mission under 501(c)3.

The Vegan Awareness Foundation, which is a major certifying entity for vegan foods, maintains tax-exempt status on the basis that it receives a substantial portion of its revenues from donations or grants—not from site inspections.

Many kosher certifying entities are set up as regular businesses and pay taxes.

The IFANCA case illustrates a flawed federal system that accepts 99 percent of all claims for tax-exempt status.  The IRS can start making amends by revoking IFACNA’s tax-exempt status.

Moreover, due to its tax-dodging behavior and World Muslim League affiliation, consumers should avoid buying any IFACNA-certified foods, and grocers should refrain from stocking their shelves with such products.

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Funding jihad is not a tax-exempt activity

October 26, 2011

IRS Form 990, question 76:  does your charity engage in any other activities?  One Islamic charity’s answer:  does funding jihad count?

The First Circuit has reinstated the convictions of the three jihadists who ran the Massachusetts-based Care International, who argued that the IRS’s tax form for nonprofits, Form 990, is too vague.  Money Jihad has looked at a lot of 990s.  Overall, the wording on the tax form is pretty direct.  There may be some legal grounds to question whether the IRS is specific enough on certain concepts, but excluding the publication of your jihadist magazine from your list of activities raises a red flag (or the green flag of Islam or the black flag of jihad as the case may be).

Peter J. Reilly makes some great points in this piece from Forbes last month:

I both love and hate Form 990.  I hate it because it is a real pain to prepare and review.  I have to deal with it both for clients and also in my capacity as a volunteer.  One of the downsides of being a CPA is that when you want to help a not for profit, they usually rope you into being the treasurer or chairing the finance committee. I love 990’s for the information they provide about not-for-profits.  Most not for profits, except churches, are required to file them and they are public records… Whenever I write about a case that in any way involves a not-for-profit, I will look at its 990 and I find it often adds an interesting dimension as in this  donated to .  Useful as 990’s are, I would not have thought there was a role for them in the War on Terror.  Silly me.  The First Circuit’s decision in  has set me straight.

The case was an appeal of criminal convictions of Emadeddin Muntasser, Muhamed Mubayyid, and Samir Al-Mon.  The government was also appealing the District Court’s overturning of the jury verdict on some of the counts.  The case is largely about Form 990 with a particular emphasis on Question 76.  Question 76 asked if the organization has engaged in any activities not previously reported to the IRS.  Like supporting jihad for example.  That is not generally thought to be a valid exempt purpose.

The defendants’ twenty-four day jury trial focused on the circumstances motivating Muntasser’s formation of Care in 1993; the defendants’ failure to disclose some of Care’s activities, such as the publication of certain newsletters from 1993 to 1997; and Care’s support for, and promotion of, Islamic jihad and fighters known as “mujahideen.”  The government’s central theory at trial was that Muntasser had established Care in order to fraudulently obtain a tax exemption, so that contributions being used to finance mujahideen overseas could be deducted from individual tax returns as charitable donations.

Care was the successor to the Boston branch of  an organization called Al-Kifah –

Among its activities, Al-Kifah’s Boston branch published a pro-jihad newsletter entitled “Al-Hussam,” which translates from Arabic as “The Sword”; it sold books and audiotapes extolling the cause of jihad; and it promoted sermons and lectures by like-minded Muslim leaders. It also solicited substantial charitable donations through the publication of an annual Zakat Calculation Guide. 4 Although the organization advertised itself as a tax-exempt charity, it had never been granted charitable status by the IRS.

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Second “Muhammad” woman pleads guilty to filing fraudulent tax returns

August 10, 2011

Two tax preparers have pleaded guilty within the past 40 days to filing false tax returns.  The schemes of both women involved trickery to obtain the earned income tax credit for their clients.

First we had Sonya Muhammad of Calhoun, Louisiana.  From a Department of Justice press release:

TAX PREPARER  PLEADS GUILTY TO FILING FALSE CLAIMS FOR TAX REFUNDS

SHREVEPORT, La. – United States Attorney Stephanie A.  Finley announced today that Sonya L. Muhammad, 32, of Calhoun, La., pleaded guilty to filing false claims for federal income tax refunds. Muhammad was indicted by a federal grand jury in December 2010 on 31 counts of aiding and assisting in making false returns and 1 count of structuring. In May 2011, a superceding indictment was returned adding six more counts of filing false returns.

Muhammad owns and operates a tax return preparation business in West Monroe. At the change of plea hearing yesterday, Muhammad admitted to preparing and filing tax returns at her business knowing that the returns  contained material false claims. Between 2003 and 2007, she prepared and filed at least 31 tax returns that were materially false with regard to items such as dependants and wages in a scheme to inflate the Earned Income Tax Credit that the taxpayer would receive from the IRS. In 2011, while out on bond for these offenses, Muhammad filed six more materially false tax returns. Due to this conduct, Muhammad’s bond was revoked.

Muhammad pleaded guilty to two counts of aiding and assisting in making a false return. She faces a maximum penalty of three years in prison or a fine of $250,000, or both, for each count. She will be sentenced by U. S. District Judge James on October 3, 2011.

Next up we have Jennifer Marie Muhammad of Springfield, Illinois.  From the State Journal-Register on Aug. 3:

Springfield woman pleads guilty in tax fraud  scheme

A Springfield woman has pleaded guilty in federal court to participating in a fraud scheme that claimed more than $1 million in false tax refunds over a three-year period.

Jennifer Marie Muhammad, also known as Jennifer Powers, 42, waived indictment and Tuesday pleaded guilty to one count each of conspiracy to commit fraud and aiding and assisting in the preparation of false and fraudulent tax returns.

During court proceedings and in court documents, Muhammad admitted that in 2005 she became involved in the conspiracy with her now-deceased stepfather. She admitted that she recruited individuals whose name and social security number were used to prepare 5 to 10 tax returns which falsely claimed earned income credit.

Generally, the earned income credit is available to low-income wage-earning or self-employed taxpayers to reduce the amount of tax due. However, if the amount of the credit exceeded the tax due, the taxpayer received the excess as a refund.

According to U.S. District Court documents, approximately 435 returns were filed and more than $800,000 in refunds were issued by the Internal Revenue Service between March 2005 and April 2008 as a result of the scheme.

Sentencing for Muhammad is scheduled for Dec. 5 before U.S. District Judge Richard Mills. The statutory penalty for conspiracy to commit fraud is up to five years in prison and a fine of up to $250,000; for aiding and assisting in the preparation of false tax returns, the penalty is up to three years in prison and a fine of up to $100,000.

The defendant may also be ordered to pay restitution.

The guilty pleas follow the June sentencing of Baltimore man Tyrone Robert Campbell, also known as “Mr. Muhammad,”and “Muhammad Shahid,” to five years in federal prison for filing 600 fraudulent tax returns and commiting aggravated identity theft.

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IRS revokes CAIR’s tax-exempt status

June 28, 2011

The IRS has revoked the tax-exempt status of the Council on American-Islamic Relations.  CAIR hasn’t filed a single 990, a fairly simple tax form required for most nonprofit organizations to submit, in over three years!  (See our related coverage here from last year.)  This is in line with a pattern of slipshod accounting, misappropriation, unknown overheads, missing money, mysterious spending, and unacceptable financial controls by Islamic entities throughout the world.

The Investigative Project on Terrorism hints that CAIR did not file the required paperwork because it would reveal their reliance on foreign funding sources.  That is plausible because, if you were the attorney for CAIR, you too would probably make the decision that it’s better to lose your tax-exempt status than it would be to be prosecuted in federal court for violating FARA, the Foreign Agents Registration Act.  (CAIR’s FARA problem is documented here, which was exacerbated by CAIR’s servile request to Libyan looney-toon Muamar Qaddafi.)  Violations of FARA carry up to a five year prison sentence.

But as a co-conspirator with the Holy Land Foundation in its scheme to fund Hamas, CAIR could be concealing far worse truths than its Gulf revenue stream.  Missing 990s not only means that we don’t know CAIR’s funding sources, but we don’t know much about their expenditures either.  CAIR’s historic involvement in terror finance schemes is chilling.

From the Politico (which notes that CAIR lied to their own reporter for this story) on June 23:

CAIR loses nonprofit status

The Council on American-Islamic Relations has lost its nonprofit status, according to the Internal Revenue Service.

The civil rights group, long accused of ties to radical Islam, is on a list of 275,000 organizations who have not filed the requisite paperwork with the IRS to maintain nonprofit status. Tax law requires annual disclosure of assets, expenditures and salaries for 501(c) nonprofits. Both CAIR and sister organization CAIR Foundation have lost their status.

A CAIR attorney initially told POLITICO that its appearance on the IRS list referred to a defunct arm of the nonprofit, and that CAIR and CAIR foundation were unaffected — a claim that a review of the IRS documents did not support. CAIR then told POLITICO the IRS was to blame, citing a number of other errors that have occurred on the IRS list. However, CAIR could not produce their IRS disclosure forms for 2007 through 2010 — which are required to be open for public inspection.

“We are looking into all of these issues and are working with the IRS to clear things up,” CAIR spokesman Ibrahim Hooper told POLITICO. “CAIR was clearly not targeted or singled in any way by the IRS.”

CAIR was named an unindicted co-conspirator in a landmark terrorism financing trial in Texas. Some Islamic charities facing federal investigations have been advised by attorneys not to file IRS paperwork for legal reasons, but there is no evidence that CAIR is currently the target of a federal probe.

Incidentally, the move helps IRS catch up with its Canadian counterpart, Canada Revenue Agency, which has so far been more agressive on revoking the tax-exempt status of nefarious Islamic charities.

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Canada revokes Daffy Qaddafi’s fake charity

May 24, 2011

While Muslim American charities associated with the Muslim Brotherhood are hard at work in Libya, Muamar “Daffy” Qaddafi’s own problematic “charity” has had its nontaxable status revoked by the Canada Revenue Agency.

The World Islamic Call Society serves as a sort of Libyan version of the Goethe Institut, but instead of teaching interested foreigners about the German language and culture, WICS established sites around the world, including Canada, to help channel money to Islamic projects including terrorism.

The most famous project funded by the Canadian branch of WICS was the JFK airport bomb plot in New York in 2007.  That constitutes legal use of zakat under Islamic law, but not proper charity work under Canadian tax law.

Here’s the solid reporting from the Ottowa Citizen on May 7, h/t GMBDR:

Gadhafi charity in Canada linked to terrorism

Government revokes status of World Islamic Call Society

By GARY DIMMOCK, The Ottawa Citizen

OTTAWA — The Harper government has revoked the registration of a longtime Canadian charity that it says was established as a front by Libyan ruler Moammar Gadhafi to funnel money to terrorists the world over — including a Muslim militant cell implicated in a 2007 plot to blow up JFK airport in New York City.

According to government documents obtained by the Citizen, the World Islamic Call Society, based in London, Ont., has been transferring money from Gadhafi’s “Jihad fund” to bank accounts of known terrorists.

A payment of $170,814.20 was made to Jamaat al-Muslimeen, a terrorist group known for a campaign of rape, torture and murder, according to the documents. This same group once attempted to overthrow the elected government of Trinidad and Tobago.

Canada Revenue Agency financial documents also show that the Canadian charity transferred $10,000 directly to the terrorist group’s leader, Yasin Abu Bakr.

In Gadhafi’s scheme, according to federal government files, money was wired in U.S. funds to the personal bank account of Assem Fadel, then transferred to the bank account of the World Islamic Call Society’s Canadian branch, only to be distributed to known terrorist organizations.

Fadel, 75, is the president of the Islamic Call Society’s sole Canadian franchise, located on Kent Street in London, Ont.

“The allegations are unbelievable,” Fadel said, when told the society had been linked to the JFK plot.

Asked why money from Gadhafi’s jihad fund would be transferred to his own bank account and then deposited into the charity’s bank account, Fadel told the Citizen that he handled the money personally because the deposits were in U.S. funds.

“The charity doesn’t have a U.S. bank account so the money came to me and I distributed the money as directed by the mother organization in Libya,” Fadel said.

Fadel said he will not appeal the government’s March 26 ruling to revoke the registration of his charity, saying it’s too much of a “hassle.”

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Poor follow-through by FinCEN?

September 19, 2010

Over the past five years, the anti-money laundering staff of the IRS has referred 60 significant money laundering cases to FinCEN which has resulted in only four fines by FinCEN.  This embarrassing revelation comes from an Aug. 31 article by MoneyLaundering.com:

IRS AML Exam Violation Letters, Referrals Lead to Few FinCEN MSB Penalties

By Brian Monroe

The division of investigatory and enforcement powers between two U.S. Treasury Department agencies has resulted in few monetary penalties for anti-money laundering compliance lapses by money services businesses and tension between the two agencies, say current and former government officials.

While the IRS’s anti-money laundering (AML) examination division issued more than 10,000 letters to money services businesses (MSBs) and referred more than 60 cases of “significant noncompliance” to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) over the past five years, only four have resulted in monetary penalties, according to government data.

It’s a system that undermines AML compliance, said Dave Tilzer, the former head of the New York IRS AML division. MSBs that deserve monetary penalties, including those who have shirked off several warning letters, are not being penalized, he said.

“We are the biggest paper tiger,” Tilzer said of the IRS’s AML examiners. The New York IRS division referred several cases to FinCEN the group believed were deserving of monetary penalties, “but the referrals didn’t go anywhere,” he said…

Some officials have argued that there were few penalties because the MSBs corrected their noncompliant behavior before the case progressed any further.  Nevertheless, one wonders why FinCEN can’t fine an MSB for prior noncompliant activity while acknowledging that it has taken the steps to correct it going forward.

It doesn’t look like MoneyLaundering.com could get a quote for this story from FinCEN Director James H. Freis, Jr. or Deputy Director Charles M. Steele, but I’d love to hear their reaction.