|
| Author
|
Post |
 
|
|
untanglingwebs
El Supremo
|
Master Plan - North Flint Reinvestment Corp
www.northflintreinvestmentcorp.com/Master-Plan.html
1159 E. Foss Avenue - Flint, Michigan 48505 ... Operation Unification, Concerned Pastors for Social Action, Flint Housing Commission, ..Ujima Village, a Swahili term signifying neighborhood unity, will consist of three major neighborhood development components which will include early childhood education initiatives, mixed-income housing, and comprehensive neighborhood services. One of the primary goals will be to establish a “cradle-to-graduation” educational continuum by merging north Flint’s Eagle’s Nest Child Care Center (an area charter school), and an Arts, Trade, and Technology Center.
NFRC also plans to construct mixed income, mixed-use housing adjacent to the charter school. A housing collaborative, consisting of Genesee County Habitat for Humanity and the Flint Housing Commission, has been formed to coordinate the construction of quality housing for families and senior citizens. Approximately 30 homes will be constructed as part of this component.
Ujima Village will also include a commercial district with plans to offer goods, services, safety, and recreational activities to area residents. A federal credit union, police mini-station, neighborhood grocery store, recreational facility, and multiple use office space will anchor the neighborhood services component of this project.
Collaborating NFRC partners include: Genesee County Habitat for Humanity,
Operation Unification
, Concerned Pastors for Social Action, Flint Housing Commission, FABC Federal Credit Union, Citizens Bank, Foss Avenue Block Club, Northeast Village Citizens District Council, and Northridge Academy
_________________________________________________________________
.Operation Unification and Charles Young Jr. created the Village in Beecher on N Saginaw Street. It is interesting to see the Village concept being recreated in this master plan. |
|
|
Mon Sep 23, 2013 11:20 pm |
|
|
untanglingwebs
El Supremo
|
Why Operation Unification and Charles Young Jr. (and his cohorts) all need to be investigated. Probably should say why the Detroit HUD OIG screwed up by not investigating.
Issue Date November 5, 2001 - HUD Archives
archives.hud.gov/offices/oig/reports/internal/ig290001.pdf · PDF file
Audit Case Number 2002-SF-0001 . Management Memorandum 2002-SF-0001 Page ii ... Page 41 2002-SF-0001 during our current audit of HUD’s nonprofit discount sales
Last edited by untanglingwebs on Sat Mar 01, 2014 5:12 am; edited 1 time in total |
|
|
|
Mon Sep 30, 2013 8:44 pm |
|
|
untanglingwebs
El Supremo
|
This audit was a nationwide audit of nonprofit participation in HUD single family programs.
"HUD's current regulations, guidelines, and controls have allowed profit motivated entities and individuals to manipulate the program and reap the benefits of discounted sales prices in the under HUD's Real Estate owned (REO) discount sales program."
The findings of this audit are also relevant to the situation with Operation Unification as a CHDO and a NSP developer. |
|
|
|
Mon Sep 30, 2013 8:53 pm |
|
|
untanglingwebs
El Supremo
|
In the audit the review suggested "a significant percentage, if not the majority of discount sales went to nonprofits who were apparently either created by profit motivated individuals , or were under the control and influence of outside parties, such as realtors, investors, lenders, consultants and rehabilitation contractors."
It was these outside influences that benefitted an not the low to moderate income homebuyers who the programs were intended for.
Another finding was that abuses in the program resulted from "deficient initial screenings and approval process."
Some identified violations:
excessive profits;
inappropriate dealings with "identity of interest " contractors and lenders;
shoddy rehabilitation work;
and lack of administrative capacity. |
|
|
|
Mon Sep 30, 2013 9:03 pm |
|
|
untanglingwebs
El Supremo
|
Audit page 16
"Current procedures and controls are inadequate to ensure nonprofit organizations are legitimate organizations who are not operating under the control of other parties, have the administrative capacity to carry out a rehabilitation and sales program"....
"specifically, insufficient information is obtained during the approval process for HUD to make an informed decision regarding the independence and capability of the nonprofit organization."
Note: If an accurate appraisal of Operation Unification had been completed by either the City or the County, neither entity would have granted them CHDO status and/or contracts. |
|
|
|
Mon Sep 30, 2013 9:09 pm |
|
|
untanglingwebs
El Supremo
|
Audit page 17
The audit revealed that "copies of the nonprofit Organizations 501 (C) 3 applications to the Internal Revenue Service requesting tax exempt status under 501 (H) of the Internal Revenue Code are not obtained and reviewed during the approval process."
"The information should be obtained and reviewed to determine the original purpose of the nonprofit organization an whether this is compatible wit the management of a housing purchase and sales program."
Note: Operation Unification was not created for housing. The for-profit and combined non-profit board did pass a motion from the floor to add housing. Not good enough. The for profits and the non profits should not have been combined and should not have had a united board of directors. There should have been a resolution from the non profit and proper amendments made. This references the audit's finding of influence from profit motivated entities and individuals.
The minutes provided as proof of the organization reflected a combined bard. In fact the NSP funding indicated a sister for profit. Was Operation Unification essentially acting as a front for other parties.
Was this a case of gross mismanagement on behalf of the City and the County? Did someone from one or both governments benefit financially? |
|
|
|
Mon Sep 30, 2013 9:26 pm |
|
|
untanglingwebs
El Supremo
|
The audit indicated there should be a physical inspection of the nonprofits organizations facilities and help determine if the nonprofit had the capacity to carry out the programs. There was either no public record checks or there was deliberate misinformation about the financial status and the relationships or there would have been an indication that the nonprofit was only a front to reap the benefits of a HUD approved nonprofit.
Here the profit motivated sister organizations run most of the aspects of the nonprofit. The nonprofit merely receives a fee for allowing the profit portion to use their name.
Operation Unification should have been rejected because of their inappropriate identity of interest relationships and their lack of a financial capacity. HUD should have been monitoring them closer especially when they first noted deficient construction. The monitoring agency hired by the city was rejected by HUD because there was no competition in the hiring process. The company failed to address the construction deficiencies.
It appears there was a failure at all levels and as a result funding was misspent and there were many cost overruns. Poor siting by the city means the houses have been sitting a long time without being sold. In fact the City was cited by HUD because the houses were rented without HUD approval.
Also the current lawsuit against Operation Unification is a testament to the falure of the City to properly access the risks.
Last edited by untanglingwebs on Fri Feb 28, 2014 6:57 am; edited 1 time in total |
|
|
|
Mon Sep 30, 2013 9:48 pm |
|
|
untanglingwebs
El Supremo
|
After all of their dirty dealings it appears Charles Young and Operation Unification have filed a civil rights complaint against the City of Flint.
Barbarba Griffith-Wilson is shown in the minutes as being made a member of the Board of Directors of Operation Unification. The nonprofit she allegedly operates, T R Harris, was deeded a piece of property on Lippincott. The house is condemned and the taxes are in arrearage. It is a property that was part of the Steinberg v Young et al lawsuit alleging Young used his Chase Bank line of credit for his Detroit Corporation, SDE-Business Partnering to buy land in Genesee County to avoid paying Steinberg his perfected legal judgment. |
|
|
|
Thu Feb 27, 2014 5:51 am |
|
|
untanglingwebs
El Supremo
|
The Inurement Prohibition & Non-Profit Organizations
Non-profit organizations are subject to what is known as the nondistribution constraint. Simply stated, this means that non-profit organizations cannot distribute profits to those who control it. The nondistribution constraint is the fundamental distinction between non-profit organizations from for-profit organizations.
In the Internal Revenue Code, the nondistribution constraint is embodied in the prohibition against inurement. “Inurement” is an arcane term for “benefit.” The inurement prohibition forbids the use of the income or assets of a tax-exempt organization to directly or indirectly unduly benefit an individual or other person that has a close relationship with the organization or is able to exercise significant control over the organization.
The essence of the inurement proscription is found in the language of Code § 501(c)(3), which provides that no part of a 501(c)(3) organization’s net earnings can inure to the benefit of any private shareholder or individual. Although this would clearly prohibit the distribution of dividends to those in control of the organization, the inurement prohibition is much broader than that in application. Most exempt organizations – including 501(c)(3) and 501(c)(6) organizations – are subject to the inurement prohibition.
The goal of the inurement prohibition is to prevent siphoning off of an exempt organization’s assets by insiders – those in control of the organization. In this context, “control” may be direct (as in the case of formal directors) or indirect (such as control over others who are officers or directors). Any time assets of the organization flow through to benefit the organization’s insiders, whether directly or directly, inurement is an issue.
The inurement restriction is absolute: An organization that violates this prohibition will not qualify (or will cease to qualify) for tax exemption regardless of whether it otherwise meets the appropriate statutory requirements for exemption. Because of the harsh nature of this rule, it has historically been enforced only in the most egregious circumstances.
Because the inurement prohibition was rarely used, Congress enacted a related set of rules that would provide an “intermediate” sanction. The intermediate sanction rules are “intermediate” in the sense that it is not as severe as outright revocation of tax exemption but does penalize the organization. The intermediate sanction regime is discussed in our section on excess benefit transactions.
In cases involving inurement, the IRS may impose the intermediate sanction penalties in lieu of or in addition to the revocation of tax exempt status. The IRS has published standards to determine how it will decide whether to revoke the 501(c)(3) status of an organization that has engaged in a transaction that constitutes both inurement and excess benefit. These standards provide that the IRS will consider all relevant facts and circumstances in making a determination of whether to revoke the tax exempt status of an organization that engages in an excess benefit transaction that constitutes inurement. Factors the IRS will consider include:
◾The size and scope of the organization’s regular and ongoing activities that further exempt purposes before and after one or more excess benefit transactions occurred;
◾The size and scope of one or more excess benefit transactions relative to the size and scope of the organization’s regular and ongoing exempt functions;
◾Whether the organization has been involved in repeated excess benefit transactions,
◾Whether the organization has implemented safeguards that are reasonably calculated to prevent future violations, and
◾Whether the excess benefit transaction has been corrected or the organization has made a good faith effort to seek correction from the disqualified person or persons who benefited from the excess benefit transaction.
This system effectively gives the IRS two options to enforce the nondistribution constraint. In blatant violations of the inurement prohibition, the IRS can both revoke tax exemption and impose monetary penalties under the intermediate sanction regimes. In less severe cases, the IRS may seek to correct the situation through intermediate sanctions alone.
Next: Excess Benefit Transactions & Nonprofit Organizations
About Nonprofit Law Report
Copyright © 2014 Jeramie Fortenberry |
|
|
|
Sat Mar 01, 2014 8:00 am |
|
|
untanglingwebs
El Supremo
|
Excess Benefit Transactions & Non-Profit Organizations
As stated in our discussion of inurement, the prohibition on private inurement is absolute. In theory, even one dollar of private inurement could result in loss of tax exemption. Because of the harshness of the penalty, private inurement was infrequently invoked. This effectively meant that most inurement was not penalized.
To address this enforcement deficiency, Congress enacted sanctions on “excess benefit transactions” under Code § 4958 in 1996. These rules parallel and overlap the private inurement rules and have become the primary focus on enforcement efforts. Code § 4958 imposes “intermediate sanctions” (i.e., a sanction that is less penal than full loss of exemption) for insubstantial inurement.
How to Determine if There Has Been an Excess Benefit Transaction
Unlike the vague tests for inurement and private benefit, testing for excess benefit is fairly straightforward. The test requires three definitional inquiries: (1) is this organization an “applicable tax-exempt organization;” (2) is the person involved a “disqualified person;” and (3) is the transaction an “excess benefit transaction.” If the answer to all three questions is “yes,” then there has been an impermissible excess benefit.
Applicable Tax-Exempt Organizations. The first question is whether the organization is an “applicable tax-exempt organization.” Applicable tax-exempt organization include only 501(c)(3) and (c)(4) organizations or organizations that were 501(c)(3) or (c)(4) organizations at any time within the five preceding years. For example, 501(c)(6) organizations are not subject to Code § 4958.
Disqualified Person. The second question in excess benefit analysis is whether there is a “disqualified person.” Disqualified persons include:
1. Any person who was, at any time during the five-year period ending on the date of the transaction involved, in a position to exercise substantial influence over the affairs of the organization (whether such influence is formal or informal);
2. A family member of an individual in the preceding category; or
3. An entity in which individuals described in the preceding categories own more than a 35 percent interest.[1]
Those who perform the functions of voting members of the governing body, presidents, chief executive officers, chief operating officers, chief financial officers, and treasurers are all disqualified persons, regardless of title. And certain persons are deemed not to be disqualified persons. These “deemed non-disqualified persons” include 501(c)(3) and (c)(4) organizations and employees receiving economic benefits of less than a specific amount.
Excess Benefit Transaction. An “excess benefit transaction” is a transaction in which an economic benefit is provided by an applicable tax-exempt organization to or for the benefit of any disqualified person, if the value of the economic benefit provided by the exempt organization exceeds the value of the consideration (including performance of services) received for providing the benefit. Reasonable compensation paid to employees of the non-profit organization is not considered an excess benefit.
Excess benefit transactions include more than just benefit provided to a disqualified person. Also includes are benefit is provided to a non-disqualified person for the use of a disqualified person. This could occur, for example, when benefit is provided to an organization in which a disqualified person has a financial interest.
Penalties for Excess Benefit Transactions
Unlike the remedies for inurement and private benefit, which penalize the tax-exempt organization alone, intermediate sanction regime penalizes the disqualified person involved in the transaction. Organizational managers who participate in the transaction could also be liable.
Penalties on the Disqualified Person
A disqualified person is subject to an excise tax (called the “initial tax”) equal to 25 percent of the excess benefit. An additional tax in the amount of 200 percent of the excess benefit involved is imposed on the disqualified person if the initial tax was imposed and there was no correction within the taxable period. The “taxable period” is the period beginning on the date of the transaction and ending on the earliest date of either the date of mailing of a notice of deficiency as to the initial tax or the date on which the initial tax is assessed.
To correct an excess benefit, the disqualified person must undo the excess benefit transaction to the extent possible and take all necessary steps to place the organization in no worse position than if the disqualified person had dealt property. This usually requires the disqualified person to make a payment in cash or cash equivalents (other than promissory notes) and/or return the property transferred in the excess benefit transaction to the applicable tax-exempt organization.
Penalties on Other Organizational Managers
If the tax is imposed on a disqualified person and no correction occurred during the taxable period, an organizational manager that participated in the transaction, knowing that it was an excess benefit transaction, is subject to an excess tax equal to 10 percent of the excess benefit, up to a maximum amount of $20,000 per transaction. The tax on the organization manager is not imposed, however, if participation in the transaction was not willful and was due to reasonable cause.
Next: What is Private Benefit?
[1] Treas. Reg. § 53.4958-3(a)(1), (b)(1), and (b)(2).
About Nonprofit Law Report
Copyright © 2014 Jeramie Fortenberry |
|
|
|
Sat Mar 01, 2014 8:04 am |
|
|
untanglingwebs
El Supremo
|
How Government failed to protect the citizens o Flint.
Genesee County officials claim the Genesee County Metro Planning is a quasi independent agency. I am not buying that line. In my mind this agency was under the influence of outside politicians or just incompetent.
I have the same belief when it comes to Flint's department of Community and Economic Development under Eason and Walling.
IRS rules on 501 (C) 3 corporations and HUD rules on Community Housing Development Organizations (CHDOs) are very specific on rules about nonprofit housing agencies being under the control of for profit corporations or entities. The red flags were all over the materials provided and the applications provided by Charles Young on behalf of Operation Unification. These warning signs were ignored by the City and the county and even the IRS ignored the transition in the mission statement. Housing nonprofits undergo additional scrutiny by the IRS. The original mission involved parent training and then the IRS 990 documents began to mention housing, although at one point in time they clamed they were property managers.
Operation Unification was created as an entity under the control of the for-profit corporation SDE-Business Partnering (SDE-BP) and SDE-BP CEO Charles Young Jr. In the lawsuit Steinberg V Charles Young et al, Steinberg details the relationship of the Detroit based corporation and the creation of the OU Group. The lawsuit describes Young's testimony at the arbitration hearing on August 20 and August 21, 2008. Young discussed hw he transferred funds out of SDE-BP to fund Operation Unification , OU Home and OU Village. He stated he had 40 employees in Flint and he used the Corporate line of credit from Chase Bank to meet payroll.
"What we have is a nonprofit organization that basically, we got people that go out and solicit Walmart and so forth, and they raise funds and those funds go into this nonprofit. But they all were classified under OU, Operation Unification, Village Operation, Operation Home and are (sic) nonprofit, are(sic ) 501(C), but the other two rolls up under SDE as businesses."
"There was no money for SDE for 6 months-That money came from SDE and our line of million paying s---, so we did it back and forth to meet cash flow." |
|
|
|
Sat Mar 01, 2014 2:17 pm |
|
|
untanglingwebs
El Supremo
|
Also in Steinberg v Young et al at page 59 of 184:
"In addition, Young transferred funds between and among the companies that he controlled which had the appearance of altering the appearance of the companies financial condition"
Creditors Exam testimony of Young pages 22& 23 of184:
"We used the line (of credit) to pay bills of any business that had a payroll in it. So if OU Home had a payroll, it was used to pay that payroll. In some cases thy put money in, in some cases they didn't. It depended on where the cash flow was coming from."
Yong admitted that applied to OU Village as well. He indicated they were 4 different accounts all under Chase which allowed them to move funds between accounts.f |
|
|
|
Sat Mar 01, 2014 2:31 pm |
|
|
untanglingwebs
El Supremo
|
Steinberg researched real estate transfers among the identities of the OU Group and Young. "Young has engaged in a pattern and practice of transferring properties among himself and his entities at key dtes relating to the legal proceedings brought by Plaintiff against Young's entities."
(Page 24 of 184)
During 2006 and 2007 SDE-BP and another corporation of Young's SDE-MRO, OU Home and OU Village allegedly were insolvent.
SDE-BP provided computer technology services to the automotive industry and as they declines, so did the earnings of the corporation.
(page 107 of 184)
"In addition to transferring property and funds, during 2008, Young transferred 40 % of ownership in OU Village to Defendant Lela Johnson , aka Lela McGee, and 40% of the ownership in OU Home to defendant Joann Burks."
This allegation is somewhat documented in the minutes provided to the County and City for the Operation Unification applications. The minutes mention creating stock, but does not mention the distribution. Later minutes indicate an attorney has advised them this was improper and the stock was rescinded. The nonprofit and the 2 sister for profits had the same Board of Directors, which was referenced in the Consumer Energy lawsuit. |
|
|
|
Sat Mar 01, 2014 2:49 pm |
|
|
untanglingwebs
El Supremo
|
Steinberg also alleged that Young made offers that would have allowed the corporation having to pay some taxes on his salary.
(page 100 of 184)
Young was also involved in attempts to improperly avoid payment of taxes by making payment to employees outside of the different business entities normal payroll account." |
|
|
|
Sat Mar 01, 2014 2:55 pm |
|
|
untanglingwebs
El Supremo
|
In February 2008 Young purchased the apartments at 410 Lippincott in the name of Operation Unification for $750,000. On June 12,2008 Operation Unification quit claimed the apartments to Young. On August 8,2008 Young took $680,000 mortgage on the property from Franklin bank and filed an assignment of rents in favor of the bank. The property was later transferred back to Operation Unification.
The properties in and around the Village have had multiple transfers between OU Village and Young. OU Village and OU Home were dissolved in 2011. Previously the interlocking Board of Directors had eliminated OU Home and gave the assets to Operation Unification. This was during the Steinberg lawsuit and the local board of Directors minutes states an unnamed attorney advised them to correct both the stock issue and the asset issue with OU Home. (The local Board of Directors is not the Board of Directors shown on the IRS 990 reports) record of the lawsuit allegedly show Young transferring funds from DSE-BP during the arbitration.
Young had also purchased other Genesee county properties with the Case line of Credit. The property in Beecher that comprised the Village. The Village literature indicates a million dollar investment went into its construction. He also purchased 514 E. Stewart, 302 W. Baltimore Blvd., 2012 Clifford St., 2016 Begole St., 1076 Kurtz Ave., 5910 Edwards Ave., 615 Lippincott Blvd., 2309 Begole St., and 5423 Fairhaven St. Then eight days before the arbitration, Young made each of these properties a separate limited liability corporation.
One day before arbitration, Operation Unification purchased 1005 Lippincott Blvd. for $10,500. This property is being prepared for demolition. Barbra Griffith-Wilson was made a member o the Operation Unification Board of Directors. Operation Unification transferred this property to the nonprofit T. R. Harris, the same nonprofit operated by Barbara Griffith-Wilson. Griffith-Wilson should have been a disallowed person. |
|
|
|
Sat Mar 01, 2014 3:34 pm |
|
|
|
Forum Rules:
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
|
|
|
|
|
FAQ
Search
Memberlist
Register
Profile
FlintTalk.com Forum Index
> Political Talk
