Durant and Daughter, Hope Durant Loomis, Unlawfully Siphoned $1.4 Million from Charity; Could Be Forced to Repay Money and Face Penalties Totaling Almost $1.75 Million
DETROIT – Today the Michigan Democratic Party filed a complaint with the Internal Revenue Service against Clark Durant and his daughter, Hope Durant Loomis, for unlawfully profiting off a private foundation originally established as a “sponsor-a-child” charity.
- Between 2009 and 2011, Durant and his daughter siphoned about $1.4 million from the charity.
- Over those years Durant and his daughter took 95 percent of all funds donated to the Genesis Foundation for themselves — a clear violation of federal tax laws.
- The penalty for such violations can be as severe as full repayment of all unlawful compensation, plus an initial penalty equal to 25 percent of the unlawful payments. In this case, Durant and Loomis could be forced to repay almost $1.75 million.
Mark Brewer, chair of the Michigan Democratic Party, held a news conference with independent tax attorney Tammie Tischler to outline the complaint, which will trigger an IRS investigation into the dealings of Durant, Loomis and the Genesis Foundation.
Tammie Tischler, an independent attorney specializing in non-profit and tax law, said:
“Based on the documents we have reviewed, The Genesis Foundation appears to be a complete sham organization used for the single purpose of paying Clark Durant and his daughter, Hope Loomis, more than $600,000 per year. Large donations are made by two donors, and the tax returns show those funds go directly to Durant and Loomis in the form of compensation.
“Non-profit law prohibits the use of charitable assets for the private interests of founders, family members and board members. This is a blatant violation of the laws governing non-profit organizations.”
Statement from Mark Brewer, chair of the Michigan Democratic Party:
“Clark Durant claims to be a rebel with a cause, but it turns out he’s siphoned off $1.4 million from a charity originally created to help Detroit kids afford school. It’s clear the only cause Durant cares about is his own. A man who unlawfully abuses charities and foundations for personal gain is not the kind of ‘rebel’ Michigan families need.
“A charity designed to help kids should never have been turned into a personal slush fund for Clark Durant and his family. I am calling for full penalties under the law to make sure this abuse of non-profit charities comes to an end.”
Specific violations of IRS code:
- The first provision of the Internal Revenue Code that Durant, his daughter, and Genesis Foundation have violated is the prohibition against self-dealing. Self-dealing involves the payment of compensation by a private foundation or charity to ‘disqualified persons’ such as presidents or founders of a foundation, and the founder’s family. Durant and his daughter both fall into the disqualified person category because of Durant’s position as President and founder of Genesis.
- The second provision of the Internal Revenue Code that Durant, his daughter, and the Genesis Foundation have violated is the prohibition against private inurement. Private inurement code says that foundations are prohibited from using charitable contributions for the benefit of individuals associated with a foundation. The compensation Durant and his daughter receive clearly violates private inurement laws.
- Further, according to IRS code, a private foundation must devote substantially more than half of its assets directly to charitable activities. Since 95 percent of Genesis Foundation assets go directly to Durant and his daughter, they are clearly in violation of this IRS code. Paying Durant and his daughter is not a charitable activity.
Penalties for violation of IRS code:
- The penalty for such violations is significant. Individuals found to be violating the IRS code can be required to repay the full amount they have unlawfully taken, plus face an initial penalty equal to 25 percent of the unlawful payments that Durant and his daughter received. In this case, Durant and Loomis could be forced to repay almost $1.75 million.
- If individuals found to be in violation of the law do not repay the foundation within the timeframe set by the IRS, Durant and his daughter would be subject to an additional penalty equal to 200 percent of the prohibited compensation.
- The IRS also has the ability to strip the Genesis Foundation of its non-profit status.
For more information:
More information can be found on Clark Durant’s sham charity and the IRS complaint at www.clarkscharityscam.com.