NEW YORK – The Clintons have "dug themselves a deeper hole" by refiling "fraudulent" IRS tax form 990s for the Clinton Foundation for years 2010-2013 and for the Clinton Health Access Initiative for years 2012 and 2013, charges Wall Street analyst and investor Charles Ortel.
“As they have done since January 2001, trustees of the Clinton Foundation recently released certain federal tax filings, including accounting work product falsely characterized as ‘independent certified audits,’ that are inaccurate and materially misleading, and failed to make important disclosures that are material omissions,” Ortel explained to WND.
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Ortel, who has been investigating the Clinton Foundation's finances since the spring, said the Clinton Foundation is "not properly organized in any legal jurisdiction to pursue tax-exempt purposes other, perhaps, than operating an archival records repository and related research facility in Little Rock, Arkansas."
“Numerous written representations to state, federal and foreign government authorities are false and deceptive," he said. "Extensive disclosures made to the general public are also false and deceptive.”
Ortel's investigation has led him to conclude that the Clinton Foundation has illegally enriched its namesakes, Bill, Hillary and Chelsea Clinton.
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Ortel rejected the contention by Clinton Foundation President Donna Shalala that the amended returns resulted from an “exhaustive review.” He noted that the most significant changes made were to separately report $20 million received mostly from foreign governments between 2010 and 2013 and to break out income derived from the Clintons’ speeches as separate line-item entries, with neither change affecting the bottom line numbers originally reported.
'Compounding the fraud'
Ortel noted that since January 2001, trustees of the Clinton Foundation have raised more than $2.1 billion, according to public disclosures, through mail, telephone and digital media across state and national boundaries.
“These solicitations violate numerous state, federal and foreign laws and continue, according to the Clinton Foundation, on record pace," he asserted.
“Instead of investigating and attempting to correct false and misleading information contained in submissions to the IRS – including accounting work product falsely characterized as independent audits – Clinton Foundation trustees and outside professional experts, including PricewaterhouseCoopers, have compounded previous errors and illegal acts,” he insisted.
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After reviewing the amended IRS form 990s filed Monday by the Clinton Foundation, Ortel renewed his call for criminal investigations to begin at the state level.
“Following the 16 November 2015 IRS filing deadline, the question for state attorneys general and for foreign regulators is how much time must pass before government authorities commence criminal prosecutions against the Clinton Foundation and against its trustees and agents, for continuing and expanding a longstanding pattern and practice of deception while continuing to raise funds using false and materially misleading public disclosures?” he asked.
To validate his argument that the amended financials were still fraudulent, Ortel focused on the largest constituent element within the Clinton Foundation, the Clinton Health Access Initiative, which he terms “New CHAI,” and the largest single physical asset of the Clinton Foundation, the Clinton presidential library complex in Little Rock, Arkansas.
'False and illegal creation'
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In May, WND published Ortel’s analysis of the reorganization of the Clinton Foundation that occurred when Hillary Clinton joined President Obama’s Cabinet. The foundation closed the Clinton Health Access Initiative Inc., which had been operating as a program of the Clinton Health Foundation.
Subsequently, CHAI was re-opened as a separate organization responsible for filing its own IRS tax form 990, creating the opportunity for the Clintons to transition the financial statements of what Ortel calls “Old CHAI,” ending Dec. 31, 2009, into the financials of the “New CHAI,” beginning Jan. 1, 2010.
Ortel calculated that in the transition, $17 million went missing from Clinton Foundation financial reports before Hillary Clinton completed her first year as Obama’s secretary of state.
“Between 29 September 2009 and 15 March 2010, Clinton Foundation trustees together with certain outside experts submitted a false and materially misleading application to the IRS – whose Tax Exempt Organization Department was then headed by Lois Lerner – and obtained, improperly, a determination letter authorizing New CHAI to operate as a public charity,” Ortel explained to WND after reviewing Monday’s amended and refilled IRS Form 990s.
He said that unlike the application to register the Clinton Foundation and to register New CGI, the application to register New CHAI is not available on the main Clinton Foundation website, he pointed out.
An incomplete version of the application to register New CHAI is available through the New York State Charity Bureau, he said.
Ortel said this "false and illegal application, together with all supporting details including correspondence, is certainly material to any informed, professional assessment of the legal status of the Clinton Foundation and of its single largest constituent element, New CHAI."
“Central to the application is the claim that New CHAI was not a ‘successor’ to any organization,” he stressed. “Crucial financial information ‘audited’ by BKD and filed with New York State is purposefully obscured on the Clinton Foundation website showing just how substantial revenues, expenses, assets, and liabilities were of an entity called ‘CHAI’ during 2009.”
“Moreover, footnotes in financial statements that, again, are purposefully obscured in Clinton Foundation disclosures for 2009 and for 2010, make abundantly clear, as stands to reason, that New CHAI certainly stepped into the shoes of ‘CHAI’ starting in 2010,” he insisted.
He said the accounting firms BKD, and later MHM and PwC, either failed to investigate how New CHAI was constituted in each of the many foreign countries where New CHAI has operated since Dec. 31, 2009, or they "investigated and elected to withhold from government authorities and from the general public the negative, disqualifying conclusions they should have found doing proper due diligence."
Ortel went on to argue that the entity described as “CHAI” in the 2009 filings found at the New York State Charity Bureau website is an outgrowth of “illegal operations begun after 12 July 2002 by Bill Clinton and by Ira Magaziner, neither of whom were originally officers or directors of the Clinton Foundation in 2002.”
“These operations, carried out in the name of the Clinton Foundation, were never properly documented or specifically approved by the IRS as valid ‘tax-exempt purposes,’ for which donors might claim tax deductions" he concluded. “Since the 2010 financial statements for the Clinton Foundation and for New CHAI are false and materially misleading, all subsequent financial statements are false and materially misleading.”
'False and materially misleading accounting'
Ortel noted that the single largest physical asset of the Clinton Foundation is what remains of the Little Rock, Arkansas, campus.
He contends that Footnote 13 in the 2014 accounting work product issued by PwC contains a “false and materially misleading set of disclosures.”
The Footnote 13 (2004 audited financials) in question reads as follows:
In 2004, the Clinton Foundation entered into a joint use, operating and transfer agreement with the National Archives and Records Administration (NARA) that expires February 29, 2101. Under the agreement, NARA agreed to operate certain areas of the facility known as the William J. Clinton Presidential Library and Museum (the Library) for the purposes of housing, preserving and making available, through historical research, exhibitions, educational programs and other activities, the presidential records and historical materials of President William Jefferson Clinton.
“Because the terms of the lease essentially transfer to NARA the right to use portions of the Library for a period in excess of the property’s expected economic life, the cost of construction of those areas operated by NARA, which amounted to approximately $36,000,000, has been excluded from the Clinton Foundation’s statements of financial position.
“In violation of applicable laws, Clinton Foundation trustees failed to employ accrual accounting principles through Dec. 31, 2004, the period during which the main portion of the Little Rock complex was constructed,” Ortel said.
Ortel pointed out that Footnote 11 of the 2005 accounting work product issued by BKD tells “a radically different story concerning accounting for the supposed $36 million ‘donation’ to NARA in 2004.”
The Footnote 11 of the 2005 audited financials in question reads:
In 2004, the Foundation entered into a joint use, operating and transfer Agreement with the National Archives and Records Administration (NARA) that expires February 29, 2101. Under the agreement, NARA agreed to operate certain areas of the facility known as the Clinton Library for the purposes of housing, preserving, and making available, through historical research, exhibitions, educational programs, and other activities, the Presidential records and historical materials of President William Jefferson Clinton.
Because the terms of the lease essentially transfer to NARA the right to use portions of the Library for a period in excess of the property's expected economic life, the cost of construction of those areas operated by NARA have been recorded as a program service cost on the Foundation's Statement of Activities in the amount of $36,000,000 in 2004.
“The unjustified switch in accounting treatment relating to the largest physical asset of the Clinton Foundation appears to be part of a continuing plan to shift attention away from the likely diversion of $36 million in cash out of an IRS-authorized public charity during and after 2004,” Ortel said.
“Moreover, during and after 2004, Clinton Foundation trustees and outside auditors attempted to mask the illegal diversion of a further $28.5 million by improperly accounting for certain borrowings,” he continued.
Ortel noted that the Clinton Foundation purposefully does not provide copies of the accounting work product issued by BKD concerning 2004 that is otherwise available in the public domain.
“PwC, MHM and BKD have either failed to investigate the legal status of constituent elements within the Clinton Foundation and accounting for key periods in the history of the Clinton Foundation, or have chosen to overlook material deficiencies they may have uncovered in the course of their investigations,” Ortel concluded.
PwC refuses to answer questions
WND reported last week Ortel’s analysis that PwC had ignored his efforts beginning in May 2015 to alert the auditor to apparent material irregularities in its audit of consolidated foundation financials for calendar years 2012 and 2013.
In two emails, Ortel posed to PWC a series of questions yet unanswered by the accounting firm.
In his analysis of the amended IRS form 990s that the Clinton Foundation filed on Monday, Ortel took PwC to task for failing to respond to his questions in refiling the financial forms.
“In the case of the Clinton Foundation, PwC was made aware of specific concerns at their request starting in May 2015,” Ortel said, noting that PwC public affairs representatives had asked him in a telephone conversation in May to document his questions and concerns in email form.
“Yet, as is evidenced by issuance of their latest accounting work product, PwC has chosen to exercise gross negligence carrying out their ‘audit’ of the Clinton Foundation and constituent elements,” he concluded.
He said the attempt to claim that the minor adjustments made in the refiling were the only material errors is yet another misleading and illegal characterization made even as the Clinton Foundation continues to ramp up fundraising.
“Additional analysis and reports are in progress and will be made available in due course,” Ortel promised.
He said PwC appears, in refiling the amended forms on Monday, to be intentionally disregarding his efforts.