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March 5, 2017


Giving when it hurts: fake charities and tax fraud

“It is better to give than to receive,” the old saying goes. Philosophers such as Peter Singer are exploring the deeper aspects of this statement, probing the sense in which giving is a key act of moral agency.

There are, however, also plenty of fraudsters and scammers who take advantage of people’s desire to give by inducing gifts to bogus charities. It’s such a common problem that last month the IRS included fake charities on its annual “Dirty Dozen” list of tax scams.

The IRS warns against bogus charities that try to use names or websites that sound a lot like well known organizations. These scam-charities try to trick people into giving to what sounds like a familiar, reputable organization – but really isn’t.

Some of these scammers are after the personal financial information of donors, in order to commit identity theft, fraud or other crimes.

It isn’t only anonymous scammers, however, that donors need to watch out for. In some cases, it can be clearly identifiable people who mislead donors about what the gifts are going for.

In one recent case, for example, federal authorities accused a former NBA basketball player of tax fraud, conspiracy and other charges in connection with a charity that was supposed to help needy families in Africa. The charity was called Project Contact Africa.

The player, Kermit Washington, is accused of diverting donation money from the charity to his own uses. The dollar amounts involved number in the hundreds of thousands.

The case has already resulted in one guilty plea. A former professional football player named Ron Mix pleaded guilty to filing a false tax return related to the Washington case. Prosecutors contended that Mix paid Washington to make referrals of pro athletes to Mix’s law firm.

Mix reportedly filed claims for workers’ compensation for the athletes Washington referred to him. In return for the referrals, Mix made payments to Washington’s charity and deducted those amounts as charitable gifts on his personal income tax returns.


Tax Crimes