Nonprofit Law/Non-profit organizaton breaking laws.
Is it possible for a non-profit organization to have one person alone in charge and answer to no one?
This is somewhat difficult to explain so I will try to be brief if I can. I am a member of the Veterans of Foreign Wars (VFW). We are in a building that we do not own but the building has our name on it and uses our name for the Licenses which include liquor and gambling. This has come about because one person some years ago formed a non-profit organization (501-c3) with proper bylaws, trustees etc. under a different name. The trustees were officers of the VFW.
Over the years as people have passed away and or resigned the trustee s and officers are gone
There are officers in the VFW but they are powerless over this other corporation which now consists of one person. This person pays the employees, pays the bills etc. Has an accountant which he will not let us meet. He was appointed general manager by the board when there was a board some years ago. Presently he controls all the money going through the organization which is the one he formed. He will not answer to anyone. Ignores all bylaws that he signed in 2007 which clearly state how the board operates etc. and also that the VFW organization is to have all money other than expenses dispersed to it at the end of the year. The VFW is powerless to anything. This guy controls all the money and most of it is cash. This year it will be between 3 and 5 million dollars. He is also ignoring the bylaws of the National VFW which state he has to report financials to them. I also believe he is paying himself in cash. His salary was determined by the board a few years ago we have no way to make him tell us what he is paying himself. In addition there are large payouts of gambling to winners and no 1099’s are ever provided to winners.
The place is a beautiful 2 million dollar building. Very nice and clean. A model place for other VFW’s. This covers up a lot.
I do not want to have the place closed down because many employees depend on it for their livelihood.
How do you get someone like this guy to obey the laws when he has all the control because he has all the money. Anytime I question the fact that he is ignoring the bylaws he says he changed them verbally.
We do not have the financial resources to pursue this however this (his) corporation has a lot. He is listed on the non profit organization as Statutory Agent. The VFW also has a 501c3.
There appear to be violations of both state law and IRS regulations. "Although control by ... a small group may not necessarily disqualify [an organization] for exemption, it provides an
obvious opportunity for abuse of the claimed tax-exempt status."
Church of Ethereal Joy, 83 T.C. 20 at 23 (1984). That case is
cited in the United States Fifth Circuit Court of Appeals case
St. David's Health Care System v. U.S., 349 F.3d 232 (2003)
I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. But I will direct you to the Ohio Nonprofit Corporation law, revised as of 2010 at:
and you will read there that the state requires "(1) The number of directors as fixed by the articles or the regulations shall be not less than three "
Complaints could go to your State's Attorney General's Office as
that office generally oversees charities within the state. If the
action is criminal then your local district attorney may be
interested in prosecuting as at:
which is a pdf file of 4 different news stories.
Complaints to the IRS regarding Exempt Organizations are discussed
A referral of an exempt organization may be made by submitting Form
13909, Tax-Exempt Organization Complaint
Harvey Mechanic, Attorney at Law -
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.