Wednesday, November 08, 2017

Misleading Trenton Together

Misrepresentation and misstatement seem to be a family affair for Trenton Mayor Eric Jackson and his sister, Pamela Brooks. Their handling of Jackson’s Moving Trenton Together private foundation provides ongoing evidence that they have no idea about how to properly manage their affairs and have no problem trying to cover up by giving misinformation.

The foundation lost its tax-exempt status with the IRS for failing to file the required tax returns for three consecutive years. It has lost its New Jersey state business entity status for not filing the required annual reports for two consecutive years. MTT never registered with the state charitable organization directory. On top of all that, it appears as though MTT used Jackson’s title as mayor to get the “government” rate for renting the War Memorial for holiday concerts when they should have paid a higher, non-profit rate.  And then there is the possibility that individuals on the city of Trenton payroll may have been taking care of some MTT business while on the city’s clock.

Politicians often set up some sort of non-profit as a means to circumvent election campaign finance rules on who can give money, how much can be given (plus offering a tax deduction to donors) and what the money can be spent on. MTT was Formed in December of 2014 by Jackson, his wife, Denice, and his sister, Pam Brooks. In an article published that month, Times reporter Jenna Pizzi wrote, The mayor said he wanted to form the group, rather than partner with the many nonprofits already registered in Trenton, because there are efforts he would like to move on that will compliment the activities of existing groups.”

While there is nothing overtly illegal or improper about setting up a non-profit like MTT, care should be taken to keep it separate from any official city business. No work should be performed for the corporation by city employees while on city time; no city resources expended in the execution of MTT work, etc.  (Just look at the recent scandal involving the Friends of Mercer County Parks non-profit and the Bannon brothers as an example of what can happen).

Corporations in New Jersey must file an annual report. At its most basic, it is a five-minute on-line exercise followed by a payment to the state. It keeps the business status active for a year. The state sends out notices of renewal to the registered agent of record three months prior to the due date. The website provides all current information and not only allows you to file the current report, but you can resolve any deficiencies in prior filing years. Failure to file for two consecutive years results in the state revoking the business’s status.

Moving Trenton Together never filed any annual reports and had its business registration revoked in July of 2016.

The registered agent for MTT is David Minchello. His name also appears on the application for IRS tax exempt status.  At the time of formation, Minchello was employed by the city of Trenton as it Law Director.  Did he prepare and submit the paperwork on city time or his own?  We really can’t say.

We do know this; Minchello used the address of his firm, Antonelli Minchello PC, in Union when registering MTT in December of 2014. In the spring of 2015, the partners closed their firm and joined the DeCotiis Fitzpatrick & Cole firm. Questions arose surrounding the fact that Minchello was the city law director and his new firm had a contract to work for the city as well. He left the city’s employ in the summer of 2015.

When Minchello resigned as law director for the city, nobody thought to change the registered agent.  Renewal notices were likely sent to Minchello’s former address and not forwarded.  Had Jackson/MTT been an actual client of Minchello, would he not have taken care to see that the records were updated and/or a new agent listed? Or did Minchello feel this “duty” was no longer his responsibility because he was no longer a Jackson appointee/city employee?

Certainly, neither Jackson, his wife, nor his sister could be bothered to pay attention to the legal necessities of paperwork regarding their private foundation. It’s easily done, again, on line. But they couldn’t be bothered.  So the business registration has lapsed for failure to file.

Charities in New Jersey are supposed to register with the Division of ConsumerAffairs. There are exemptions for charities which receive less than $10,000 in annual gross receipts.  It is possible that MTT falls into the category, but we don’t know because they haven’t filed any tax returns (more on that in a minute). We do know that a search of the NJ Charitable Organization database turns up no filing for Moving Trenton Together. Doug Palmer’s Trenton First Initiative is there. So is the now defunct Tony Mack Cares Foundation. Even presumed Mayoral candidate Paul Perez’s “Partnerships for Trenton” non-profit has filed the required reports
{Edited for clarity}. There is nothing from or about Jackson’s MTT.

The Trentonian reported in December of 2016 that MTT had yet to file any tax returns.  Indeed, in August, the IRS published the revocation of MTT’s   tax-exempt status for failing to file tax returns for three consecutive years. As a private foundation, MTT was required to file the 990-PF form. Yet they failed to do so for any of their first three years in existence…2014, 2015, or 2016.

Even after the published reports of December 2016, MTT failed to file their returns. As of May of this year the IRS deemed them delinquent and revoked the non-profits tax exempt status. Public notice was posted to the IRS website in August of this year.

The Trentonian reported the following from Jackson:
“With the filing, you get an initial couple years to file it,” the first-term mayor said. “We had attempted to do it internally. There were some errors with it. It came back rejected and we didn’t get it back timely. Now, I have a certified public accountant (CPA) group that’s working on it as we speak to get it done so I can get my reinstatement. We’re curing that now.”
Unfortunately, Jackson’s statement is incorrect. Organizations must file a tax return with the IRS each and every year. In fact, it says so very clearly in the IRS determination letter sent to Jackson’s home address advising him of MTT receiving tax exempt status:

“You’re required to file Form 990-PF, Return of Private Foundation or Section 4947 (a) (1) Trust Treated as Private Foundation, annually, whether or not you have income or activity during the year. If you don’t file a required return or notice for three consecutive years, your exempt status will be automatically revoked. “
There is nothing ambiguous about that statement. MTT was required to file. Period. There is no pass given for “an initial couple of years.” 

As for the statement that the returns were filed but had errors and came back rejected, we wanted to see if that was true. We submitted an FOIA request to the IRS for copies of any returns filed by MTT, erroneous or not. The response came back stating the 990s were "either unavailable, aren't open to public inspection under Section 6104 of the Internal Revenue Code, or destroyed (if it has been six years since the end of the processing year)".

We know that it hasn’t been six years since the end of the processing year because MTT was only founded in 2014 and thus ruled out that reason for no documents being available.

We checked Section 6104 of the Internal Revenue Code and determined that it wasn’t applicable to any returns filed by MTT.

That left open the possibility that there aren’t any records available because none were ever filed. To check on that, we called the IRS and spoke with a very nice fellow who answered a few questions with the adviso that he could only give general responses but that I could “read between the lines” to understand what he was saying.

First, we inquired if a tax-exempt organization is a Private Foundation but files the incorrect tax form three years running, would they have their status revoked. He answered in the affirmative.

Then we asked if, as in the case above, the wrong 990s had been filed
would there still be records available. He answered in the affirmative.

Anticipating my next question regarding MTT specifically, he answered "At this time, there are no records available."

We take this to mean that there are no records of any 990s filed by MTT because none were filed.

This directly contradicts Jackson’s statement that they filed but the form had errors and was returned to him. That simply does not appear to be the case at all. (As of the date of publication, MTT's tax exempt status is still listed as revoked for failure to file on the IRS website).

In the off chance we are drawing an incorrect conclusion, all Mayor Jackson must do is produce copies of the forms that he says were filed in error and returned. And if they have really engaged a CPA who is “working on curing that now”, show proof.  It’s that simple.  

With no tax returns available that report income and expenditures for the non-profit, we decided to look more closely into the shows MTT put on at the Patriots Theater in December 2014, 2015, and 2016. We submitted an Open Public Records Act request for the contracts and correspondence related to the three events.

We found out that MTT paid the “government” rate of $1500 for renting the theater, a 50% savings over the published rate of $3000 for not-for-profit groups. Interestingly, on the War Memorial’s own website there is no“government” rate but rather a “State Agency” rate available “only to state agency clients conducting government business.” We find it hard to see how MTT meets the definition that would qualify them for the discounted rental rate.

First, MTT by design is supposed to be an entity separate and distinct from the city of Trenton. It is therefore NOT an agency of municipal, county or state government. Secondly, per its incorporation documents, MTT was created for the business purpose of [presenting] “cultural events”. Hardly government business.

We raised the question of the rental rates to individuals at the state and were told,
“As previously communicated, the City of Trenton was represented as the Lessee for these events, so in keeping with past practice, the government rate was charged accordingly.”“The payment arrangements that are made between the Lessee, a sponsor, or a 3rd party does not impact the rental rate.”“Also, the identification of a concert for the Citizens of Trenton at no charge was deemed a municipal event.”

Indeed, on the three rental applications for the Patriots Theater, the listed organization/Presenter/Renter is listed as “Mayor Eric Jackson.” Was this done to subtly suggest that it was the City of Trenton renting the hall and thus qualify for the lower rental rate?

On the application for 2014, the check box for the renter’s non-profit status was not checked. On the 2015 and 2016 applications, the “Non-profit” box is checked, but not the government one. The War Memorial staff didn’t seem to pick up on the fact that it was not a government agency holding a government business event at the theater.

All the contact information regarding the rentals was directed to Ms. Brooks…we presume at either her or Jackson's home address and personal email (she’s not on the city payroll so there shouldn’t be a city email address for her). From the initial email correspondence in September of 2014 (before the non-profit was officially formed) Ms. Brooks identifies herself as working “on behalf of Trenton Mayor Eric Jackson” and often refers to the Mayor’s concert giving the impression it was a city event.

The security deposit for the December 2014 concert was a “starter” check such as one gets when one first opens a checking account. It was handwritten with the Payer Name and address listed as “Eric E. Jackson, Mayor” and the mayor’s home address and signed by Gilbert K. Bell. Mr. Bell is (or was at the time – we don’t know if there’s been any changes since Jackson hasn’t filed any campaign reports in three years) the treasurer of the Mr. Jackson’s Election Campaign. A second check bore the handwritten Payer name and address of Moving Trenton Together, and was signed by Jackson himself. In either event, this was NOT a city event and we maintain it should not have qualified for the lower rental rate.

And there’s another question here…the security deposit check signed by Mr. Bell in October 22 of 2014 bears the handwritten number “008”.  The second check, signed by Jackson, was dated December 18, 2014 and hand numbered 0002. It is possible that Jackson was originally going to pay for this from his campaign treasury and then decided to form the non-profit to cover the expenses. Probably because of the fewer restrictions on the donations to and expenditures from a non-profit compared to an election campaign account.

The 2015 and 2016 concerts saw checks written on fully printed checks with the Payer name and address of Moving Trenton Together at the Melrose Ave address. The 2015 checks were drawn on an account at Wells Fargo (same as the 2014 checks) but signed by Jackson himself. The 2016 checks were drawn on an account at Investors Bank and signed by Ms. Brooks.

Despite lots of evidence to the contrary, the state seemed to accept that Mayor Eric Jackson’s name on the contracts somehow made this a city (government) activity. Ms. Brooks never appears to offer up the information that this was not an official city sponsored event. Was it deliberate? You decide.

In another email thread received via the same OPRA request we find that at the beginning of 2017, MTT still owed the state money for the 2014 and 2015 rentals. Starting on February 10 of this year, the CFO of the Department of State reported to Ms. Brooks that MTT still owed the state a little over $3200 dollars. It took nearly a month to resolve the problem. The balances were paid by credit card. The outstanding $1000 balance from the 2014 show stemmed from Brooks claiming she thought the security deposit check had been cashed to cover the balance and only found out it had been returned after going through the mayor’s records.

Ms. Brooks should have paid closer attention. On the second page of the standard lease agreement with the War Memorial, it is explained in paragraph 3 (Payment of Fees) that:

A security damage/cleaning deposit of $1000.00 shall also be paid no less than 14 days prior to the event. (Please make this a separate check). The building security deposit of $1000 will be held by the Lessor until after the Event and consequent inspection of the facility. After a satisfactory inspection of the facility, and the after the Lessee has satisfied any and all financial and other obligations under the contract, the building security deposit will be returned to the Lessee.

Yet again, neither Jackson or Brooks seem capable of reading, comprehending and/or following simple directions. The check was returned and not applied to the balance due, just as is spelled out in the rental documents.

Jackson and Brooks and company repeatedly fail to do the right thing in a timely manner. The explanations offered when questioned about their ineptitude are always weak and don’t appear to stand up to scrutiny. Jackson’s method of operating is sloppy at best and may border on the unethical. 

Trentonians, think about this if he decides to seek a second term.

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