California Sues Troop Charity With Political Ties

The California Attorney General’s Office has filed suit against another charity, claiming donors were misled and unauthorized pictures and quotes of veterans were used to seek donations, with the charitable gifts used to support political campaigns.

California Attorney General Xavier Becerra filed suit against Move America Forward (MAF) in Sacramento County Superior Court. Established in 2004 and based in Sacramento, Calif., MAF is described by it leaders as the “nation’s largest grassroots pro-troop organization dedicated to support the brave men and women” of the Armed Forces. The principal mission, according to the group’s website, is to provide military troop and K-9 care packages with letters from Americans to troops deployed in combat areas around the world.

The lawsuit alleges that MAF’s marketing practices misled donors about its affiliations and charitable outreach and used pictures and quotes of veterans without permission while seeking donations. The suit also alleges that MAF “plagiarized images, quotes and information from other organizations to mislead donors and falsely inflate its effectiveness in executing its mission.”

The charity also violated Internal Revenue Service (IRS) rules by supporting a political action committee (PAC) and using charitable donations to support at least two political campaigns, Becerra alleges in the lawsuit. MAF “improperly shared resources by providing free office space” for the PACs Move America Forward PAC and the Tea Party Express. It also used charitable assets to support two political campaigns endorsed by those PACs. Charities are prohibited from candidate electioneering and their lobbying capabilities are strictly limited, under U.S. Treasury rules.

Directors Salvatore Russo and Shawn Callahan operated separate for-profit entities that charged fees for services provided to MAF and did not comply with the state’s Corporation Code guidelines for self-dealing transactions, according to Becerra, with Russo’s companies paid an estimated $1.818 million for the transactions.

Becerra’s lawsuit seeks to remove Russo and Callahan as directors of MAF and ban them from operating charities and from soliciting donations in California. The AG’s office said it would pursue further penalties, as well.

There are only two other directors listed on MAF’s most recent federal tax form for the year ending 2017: Chairman Melanie Morgan, at an average 25 hours per week, and Howard Kaloogian, at an average five hours per week. Callahan is listed as executive director, earning compensation of $67,500 for an average 40 hours per week. Russo also is identified as “chief strategist” at an average of 24 hours per week but no compensation is listed. In addition, the lawsuit identified Russo as co-founder and chief strategist of Tea Party Express, and Kaloogian as chairman.

For the fiscal year ending 2017, MAF reported total revenue and expenses of almost $3 million, with net assets of just less than $300,000, according to its IRS Form 900, filed in November 2018.

MAF indicates on the tax form’s section titled “Business Transactions Involving Interested Persons” that Russo is president and director of Russo March + Associates, Inc., a political marketing and consulting firm, which received payment for strategic consulting and management services of $69,000 for 2017. Tax forms indicated payments made of $70,000 in 2016, $70,259 in 2015 and $100,000 in 2014. The lawsuit also identifies Callahan as an employee of the firm and claims that MAF did not disclose financial relationships it had with Frontline Strategies and DonationSafe, two companies that Callahan operated from 2009 to 2013 and from 2011 to 2014, respectively.

Another allegation in the lawsuit contends that Russo owned and operated The Campaign Store, which transferred deposits to MAF’s bank account and charging fees from 7.55 percent to 10.06 percent to transfer remaining funds to MAF’s bank account, but “did not have any employees and did not add any value to the transactions.” It stopped reporting its self-dealing transactions in 2011 and between 2008 and 2014, MAF paid The Campaign Store almost $500,000 in bank service charges, according to the complaint, significantly higher than the 2.2 percent plus $0.30 per transaction fees charged by PayPal.

In a response posted on its website, MAF described itself as “one of America’s major and most successful pro-troop charities” and called the lawsuit “in keeping with the disgraceful effort of far-left politicians to attack every conservative they can.” The organization claims it was the subject of two IRS audits after it criticized Sen. Dick Durbin (D-Ill.), who then requested the IRS audit the organization.