Hillary and Bill Clinton

Hillary and Bill Clinton

NEW YORK – The Bill, Hillary, and Chelsea Clinton Foundation’s explanation for why it was divided into three, legally separate tax-exempt organizations is “misleading and false,” according to a Wall Street analyst who has conducted an in-depth investigation.

Charles Ortel says the public record appears to confirm that the Clinton Foundation’s various components were reported as one consolidated entity to the IRS, despite the foundation’s claim that appropriate changes were made when Hillary Clinton became secretary of state.

As WND reported Tuesday, based on Ortel’s findings, a prominent lawyer and a top government watchdog in the nation’s capital are calling for the Clinton Foundation to be shut down. In his second report, released Monday, Ortel documents what he believes is systematic financial fraud warranting a criminal investigation.

In his first report, Ortel found what he characterizes as an elaborate system devised by the Clintons to enrich themselves through schemes such as skimming tens of millions of dollars from U.N. levies imposed on airline travelers.

Ortel’s second report points out the Clinton Foundation website notes the original Clinton Health Access Initiative, CHAI, began in 2002, one year after the Clinton Foundation was created, “to address the HIV/AIDS crisis in the developing world and strengthen health care systems there.”

The website further specifies: “The Clinton Global Initiative [founded in 2005] was separately incorporated during fiscal years 2010, 2011, and 2012 at the request of the Obama administration while Secretary Clinton was in office. As a result, CGI filed separate Form 990s with the IRS during that time. In 2013, when Secretary Clinton left office, CGI returned to the Clinton Foundation.”

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The website continues to make clear the result was that CGI and CHAI were separated into two distinct tax-exempt organizations: “The Clinton Health Access Initiative (formerly the Clinton HIV/AIDS Initiative) became a separately incorporated entity in fiscal year 2010 and remains so today. Under FASB and GAAP rules, the Clinton Foundation is required to consolidate CHAI’s finances into its audited financial report given the relationship between the two entities.”

The statement from the Clinton Foundation website suggests the following:

  • The Clinton Foundation was originally constituted as one corporate structure that included both CGI and CHAI as program initiatives.
  • In 2010, after Hillary Clinton became secretary of state, the Clinton Foundation supposedly was broken into three distinct tax-exempt organizations, each with its own separate corporate structure and each with it’s own separate financial reporting regulatory requirements to file three distinct IRS Form 990s.
  • This structure in which CGI and CHAI were separated from the Clinton Foundation supposedly remained in place from 2010 through February 1, 2013, when Hillary Clinton submitted to President Obama her letter of resignation as secretary of state.
  • The last sentence in the above quotation from the Clinton Foundation is confusing in that it suggests that while CGI and CHAI were supposedly broken into separate corporate entities with each required to its own IRS Form 990, the financial reports of CGI and CHAI continued from 2010 through 2013 to be reported in the Clinton Foundation’s consolidated financial statements, as if the three were still one entity.
  • Then, after Feb. 1, 2013, the “Clinton Foundation” supposedly collapsed into two corporate structures, namely: (1) the Clinton Foundation plus CGI and (2) CHAI, each with separate corporate structures, with supposedly a requirement for the Clinton Foundation and CGI to file one IRS Form 990 while CHAI filed its own IRS Form 990, evidently with all three entities continuing to be reported in the Clinton Foundation’s consolidated financial statements, as if the three were yet one entity.

Shifting tax-exempt purposes

While the Clinton Foundation’s IRS determination letter dating back to the foundation’s creation in 2001 is not archived on the Clinton Foundation website, the Clinton Foundation’s 2002 IRS Form 990, Part III filing lists the organization’s “primary exempt purpose” in narrowly defined terms. It specifies that the Clinton Foundation was created “to design, construct, and initially endow a Presidential archival depository to house and preserve the books, correspondence, documents, papers, pictures, and other memorabilia of President Clinton.”

The Clinton Foundation’s 2003 IRS Form 990, Part III filing had the identical language describing the organization’s “primary exempt purpose” with no additional language included to explain the “primary exempt purpose” of CGI, as distinct from funding relevant to establishing the Clinton presidential library.

The change in language was noted in the Clinton Foundation’s 2003 IRS Form 990, Part III filing, when the organization’s “primary exempt purpose” was rewritten as follows:

President Clinton established the William J. Clinton Foundation (the foundation’s original name in 2001) with the dual missions of constructing and endowing the Clinton Presidential Center and Park in Little Rock, Arkansas and continuing the work of his presidency to strengthen the capacity of people in the United States and throughout the world to meet the challenges of global interdependence. To advance the mission the foundation has developed programs and partnerships in the following areas: economic empowerment; health security with an emphasis on HIV/AIDS; racial, ethnic and religious reconciliation; leadership development and citizen service.

The Clinton Foundation website does not document whether it filed any organizational amendment with the IRS to notify the IRS of the creation of CHAI. Nor is there any indication the Clinton Foundation asked for or obtained a new determination letter from the IRS specifying the change in the organization’s “primary exempt purpose.”

In 2005, when CGI was created, the Clinton Foundation’s 2005 and 2006 IRS Form 990, Part III filing had the identical language to the organization’s 2003 and 2004 IRS Form 990, Part III filing.

In the period 2010-2013, when the Clinton Foundation broke into three separate entities – the Clinton Foundation, CGI and CHAI – the organization filed only a consolidated IRS Form 990, with a broadly restated Part I summary of the organization’s “mission or most significant activities” defined as follows: “The William J. Clinton Foundation works to strengthen the capacity of people in the U.S. and throughout the world to meet the challenges of global interdependence.”

In other words, the public record appears to confirm that for IRS financial reporting requirements, the Clinton Foundation various components were reported as one consolidated entity in IRS Form 990 filings continuously from the inception of CHAI in 2002 and of CGI in 2005.

That is despite the corporate reorganizations described on the website that occurred when Hillary Clinton became secretary of state.

Ortel documented that on Dec. 31, 2009, the Clinton Foundation filed with the IRS an application to form a new tax-exempt organization called Clinton Health Access Initiative Inc. that he terms “New CHAI” to distinguish it from the initiative formed within the Clinton Foundation in 2002, which he terms “Old CHAI.”

Ortel reported, however, that after extensive research on the Clinton Foundation website and various government websites, he was only able to find for the document dated Dec. 31, 2009, “an incomplete version of the application lacking attachments that should have amplified answers to key questions.”

In March 2010, the IRS apparently issued a new determination letter approving New CHAI as a separate, tax-exempt organization.

The documents on the Clinton Foundation website are confusing regarding the precise nature of the corporate structure of the Clinton Foundation various entities and their IRS Form 990 reporting requirements.

A “Dear Reader” letter on the Clinton Foundation website authored by the Chief Financial Officer Andrew Kessel accompanying the “Independent Auditor’s Report and Consolidated Financial Statements, Dec. 31, 2012, 2013,” for the renamed Bill, Hillary & Chelsea Clinton Foundation notes on page 8, “In January 2010, CHAI became a separate nonprofit organization.”

The 2012 IRS Form 990 lists the Part I “organization mission or most significant activities” in another restated version, stating: “Works to improve global health and wellness, increase opportunity for women and girls, reduce childhood obesity, create economic opportunity and growth and help communities address the effects of climate change.”

Clinton Library fund morphs to combating AIDS

There is no record that any of these changing mission statements, other than the original mission statement to create and fund a Clinton presidential library, was ever completely explained to the IRS or ever formally filed under IRS guidelines for reporting changes, including changing the name of the tax-exempt organization.

Moreover, there is no record the IRS issued new determination letters as the various Clinton Foundation mission statements evolved from theoriginal narrowly defined purpose of creating and funding the Clinton presidential library to more lofty purposes, including combating HIV/AIDS globally.

“The biggest question concerning construction and architecture of legally-mandated financial reports for 2010 that remains uncorrected in the public domain is a simple one, namely: How did New CHAI step into the shoes of Old CHAI during 2010, if not as a successor organization? “ Ortel asked in his second report.

Ortel noted that the headquarters’ address, telephone number and fax machine number for New CHAI remained precisely the same as for Old CHAI after the Clinton Foundation announced corporate reorganizations of 2010 and 2013.

“To date, the true rationale for creating New CHAI has not yet been fully or fairly explained in any public disclosures made by the Clinton Foundation,” Ortel charged. “To consider why an application was made to create New CHAI, one must investigate some history going back to 2002.”

Recalling that the original “mission statement” of the Clinton Foundation as articulated in the organization’s 2002 IRS Form 990 filing was narrowly defined around the purposes of the Clinton presidential library, Ortel commented: “ The legal status that Old CHAI may have had as a tax-exempt organization, at any time, is not clear, based on preliminary review of that organization’s evolution and of the Clinton Foundation’s widely reported efforts to arrest the HIV/AIDS pandemic.”

Put simply, Ortel questioned how it is that a foundation granted federal tax-exempt status by the IRS for creating a presidential library in Little Rock, Arkansas, should suddenly come to have federal tax-exempt authorization for combating HIV/AIDS in numerous foreign nations?

Ortel is also questioning whether or not the Clinton Foundation management and directors followed the legally prescribed state and federal regulations and procedures specified to apply for and obtain federal tax-exempt status to combat HIV/AIDS. Or did Bill Clinton simply confer upon his foundations federal tax-exempt status because he decided fighting HIV/AIDS sounded like a good idea, likely to have sufficient emotional appeal to discourage or discredit critics?

CHAI: Nelson Mandela suggestion

Ortel traced the origin of the idea to create CHAI to a conversation Bill Clinton had with Nelson Mandela that Clinton relates starting on page 179 of his 2007 bestselling book “Giving: How Each of Us Can Change the World.”

There, Clinton wrote: “After Nelson Mandela and I closed the World AIDS conference in Barcelona in [July] 2002, Prime Minister Denzil Douglas of St. Kitts and Nevis asked me to help the Caribbean nations establish and fund systems for the prevention, care, and treatment of HIV/AIDS. I agreed to do what I could, but with limited staffing in Harlem and Little Rock and an already crowded list of commitments, I needed some help. I called Ira Magaziner, who had spearheaded our efforts in healthcare and e-commerce in the White House, and asked him to organize and lead the project.”

In his second report, Ortel commented: “While clearly a laudable proposition, arresting lethal devastation of the scourge of HIV/AIDS was certainly not a legally authorized tax-exempt purpose of the Clinton Foundation by July 2002, according to public records that should tell the complete story regarding a public charity.”

Ortel noted that according to Bill Clinton, the launch internationally of the Clinton Foundation HIV/AIDS initiative was swift and aggressive.

Clinton picked up the narrative at the end of page 179, continuing onto page 180 of “Giving”:

Initially, the plan we developed called for assembling volunteers to work with governments that asked for our help to increase care and treatment, beginning in the Caribbean. As we were getting organized, I asked wealthier nations to commit the funds necessary to upgrade and expand developing nations’ health services and to fund the purchase of generic drugs. The foundation’s expenses were covered by private citizens’ donations from the United States, Canada, the United Kingdom, Ireland, and other nations.”

In his second report, Ortel continued: “Though there are numerous press releases and other accounts of extensive global activity by the Clinton Foundation fighting HIV/AIDS from July 2002 onward, companion financial disclosures filed for 2002 and 2003 do not explicitly document related inflows and outflows of the HIV/AIDS initiatives.

“Filings from 2004 through 2009 start to disclose some aspects of these activities but certainly do not constitute complete, full, and fair disclosure,” Ortel said. “Moreover, Clinton Foundation filings from 2002 through 2009 do not explain how Ira Magaziner and his for-profit business interests may have been compensated, or precisely how Magaziner and the Clinton Foundation may have collaborated anywhere in the world, at any time.”

Ortel concluded that the available public record strongly suggests Clinton impulsively seized the Mandela suggestion to morph the Clinton Foundation, granted tax-exempt status by the IRS to build the Clinton presidential library, into a new special purpose – to heal HIV/AIDS in the Third World.

Ortel, a frequent guest on television and radio, and a contributor to the Washington Times and others, began his Wall Street career in June 1980 with Dillon, Read, & Co., followed by the Bridgeford Group and the Chart Group.

His international investment expertise frequently involves complex legal and financial structures in many different countries. He is currently managing director of Newport Value Partners LLC, which provides independent investment research to professional investors. He is a graduate of the Horace Mann School, Yale College and the Harvard Business School.

In an article published Aug. 4, 2009, demonstrating the financial analysis for which Ortel is perhaps best known on Wall Street, Forbes magazine noted he first broadcast his concerns about General Electric’s earnings quality in 2008, when the stock was trading above $30 a share. A year later, GE’s market value had plunge by about $200 billion, to $13 a share.

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