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Michigan GOP candidate allegedly siphoned off 95 percent of charity’s money

By Eric W. Dolan
Thursday, August 2, 2012 19:34 EDT
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Money via AFP
 
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The Michigan Democratic Party has accused Republican Senate candidate Clark Durant of illegally profiting off a “sponsor-a-child” charity.

The charity, Genesis Foundation, was created to provide tuition for children attending Cornerstone Schools, a system of nonprofit schools Durant co-founded in Detroit. But tax returns showed that about 95 percent of all funds donated to the charity go directly to Durant and his daughter, Hope Durant Loomis.

“For that reason it does not appear that this Foundation is organized and operating as a tax-exempt charitable organization,” attorney Tammie Tischler explained in an IRS complaint filed on behalf of Democrats Monday. “Contributions come in from two donors and go directly to Mr. Durant and Ms. Loomis as compensation for program services.”

She said the Genesis Foundation “appears to be a complete sham organization.”

“Non-profit law prohibits the use of charitable assets for the private interests of founders, family members and board members,” Tischler concluded. “This is a blatant violation of the laws governing non-profit organizations.”

Under federal tax laws, charitable organizations are prohibited from being used for the benefit of private interests, such as profiting the organization’s creator. Those found to be in violation of the ban on private inurement can face a 25 percent excise tax — which would amount to nearly $1.75 million for Durant. In cases where the charitable organizations has abandoned its charitable purpose, the organization can lose its tax-exempt status.

Michigan Democrats filed the complaint after the Detroit Free Press reported that Durant earned nearly half a million dollars per year.

“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,” Michigan Democratic Party chairman Mark Brewer said. “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.”

Durant has claimed the allegations are baseless. He said the charity’s work had been “vetted by national attorneys.”

Durant, former U.S. Rep. Pete Hoekstra and Randy Heckman are all seeking the Republican nomination. Whoever wins the August 7 primary election will face incumbent Sen. Debbie Stabenow (D) in November. On Thursday, Durant was endorsed by the Tea Party Express.

“We are proud to support Clark Durant because he represents the best of what the tea party movement stands for,” Tea Party Express Chief Strategist Sal Russo said. “Not only is he committed to reducing the size, cost and intrusiveness of the federal government, but he also supports the pro-growth policies that will restore American prosperity.”

Eric W. Dolan
Eric W. Dolan
Eric W. Dolan has served as an editor for Raw Story since August 2010, and is based out of Sacramento, California. He grew up in the suburbs of Chicago and received a Bachelor of Science from Bradley University. Eric is also the publisher and editor of PsyPost. You can follow him on Twitter @ewdolan.
 
 
 
 
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