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The SPLC has been federally indicted on six counts of wire fraud, four counts of false statements to a federally insured bank, and one count of conspiracy to commit concealment money laundering. And the charges were filed in the Middle District of Alabama. 14-page indictment PDF here.
In brief, the indictment alleges that the SPLC raised money under false pretenses by claiming to fight right-wing extremism, instead funding extremist informants with roughly $3 million dollars of donor money. The informants included members of the KKK and an organizer of the infamous Charlottesville unite the right fiasco. They allegedly did this using illegal means, creating fictitious cutouts and lying to banks to open phony bank accounts to obscure the flow of funds from the SPLC to their informants.
I can't help but feel some schadenfreude here - "no one is above the law" also applies to left-wing NGOs who think they can larp as spies. They even named one of their cutouts Center Investigative Agency... It seems like they flew very close to the sun thinking that their brand and political affiliation would shield them from scrutiny. Project Veritas got a lot more heat for doing a lot less.
From a layman's perspective the indictment seems pretty compelling but I'd be curious to hear what the legal commentators here think. Of course this is only one side of the argument, but those statements to the bank in particular seem quite incriminating. Also, what exactly would be the consequences for the SPLC if the DOJ succeeds on some or all counts?
This is pretty thin gruel. Nonprofits have broad discretion to use unrestricted funds any way they see fit to support their mission. Cases of nonprofit fraud usually fall into five general categories:
Entirely fraudulent nonprofits: These are grifts from the beginning where the founders never intended to spend any of the money they raised on the ostensible purpose and only lined their pockets. This is the most obvious fraud.
Embezzlement: Where an employee or director of a legitimate nonprofit misappropriates funds to line his pocket. Again, an obvious fraud, though it's limited to one person (or a few people) and isn't representative of the organization as a whole.
Questionable nonprofits: This is a term I made up to refer to organizations whose administrative expenses are grossly disproportionate to program expenses. E.g., a food pantry in a large city that raised $45 million one year but only distributed $149,000 worth of food. These are usually the biggest media scandals because they often involve large organizations that do a lot of advertising and fundraising, reflected in financial statements that suggest they spend money on little else than advertising and fundraising.
Improper use of restricted funds: This is often benign in a PR sense but serious in a legal sense. If someone donates money for a specific project, it can't be used for another project or to cover general expenses. If the food bank in the above example solicited donations for a building fund that would pay for planned renovations to their facility, and when food stamps were in jeopardy last fall they raided the fund to buy food for the needy, one could argue that it wasn't that big of a deal, maybe even the right thing to do. But it isn't permitted.
Other improper use of funds: Again, this usually involves some personal benefit to the organization's employees or directors, like directing program services towards them or distributing profits. It also includes other miscellaneous non-nos like spending money on political campaigns or endorsements and improperly paying volunteers in ways that subject you to labor laws that you aren't following.
The first thing I would note for any of these is that none of them is particularly likely to result in a Federal fraud indictment. regulation of nonprofits is done at the state level, usually by the AG. Federal involvement is limited to the IRS for tax status and the FTC if they are large organizations that do a lot of advertising. What SPLC is accused of doing, though, doesn't fit into any of these categories, and there's no clear violation of nonprofit law. What the indictment accuses them of is fraudulently soliciting donations by using the funds in a manner that is inconsistent with the mission statement as it appears on their website. If what they are accused of doing is a matter for Federal criminal charges, then practically every nonprofit in the country should be charged, mostly for stuff that is entirely unobjectionable.
Consider the following fictional example: The Allegheny Trails Alliance is a nonprofit whose advertised mission is to support trail maintenance and construction on public lands in Pennsylvania and West Virginia. They donate $10,000 in unrestricted funds to support a trail construction project in Garret State Forest in Western Maryland, which is outside of their technical operating area but is frequented by the same people who frequent trails in PA and WV. Is this wire fraud? What if they pay a contractor to perform invasive species removal at a state park where they have a maintenance contract? Is this wire fraud because it isn't directly related to trail construction or maintenance?
The answer is no, because advertising gets a lot of leeway when it comes to promises like this. Practically every product you buy contains some kind of statement that would constitute fraud if we held the manufacturers to their exact word. The biggest risk to a nonprofit spending program funds like this is from donors, who might not donate again if they don't like the projects. From a legal perspective, what matters is the mission statement that appears in official filings, and even then, most nonprofits write these as widely as possible, state AGs will only pursue the most egregious violations, and the penalties are civil, not criminal. But in SPLC's case, it's not even clear that what they did violated their ostensible mission. I don't think Todd Blanche or anyone else in the administration is going to argue that SPLC gave money to hate groups because they really like white supremacy. It's pretty uncontroversial that they were using the money to pay informants, and that they notified the authorities if any illegal activity was discovered. It may be a shady practice, but it's not directly contrary to their mission, and when you add that to the fact that the government is relying on an advertising statement on a website as an inducement for fraud, it's hard to see how this stands up.
The bank fraud allegations seem more serious, but upon closer inspection, they aren't. What they basically did is have an employee open up various accounts in the name of fictitious sole proprietorships. The SPLC then put money into these accounts, which were used to funnel money to organizations they targeted. The purpose of the fictitious businesses was to disguise the origin of the money from the organizations. If we look at the text of the statute they are indicted under:
I omitted a lot of surplussage there. In fact, I admitted so much surplussage that I wouldn't be surprised if the attorney presenting this to the grand jury read the part up to the ellipses and skipped to the end, because, and I never thought I'd say this, the indictment doesn't allege facts that make a prima fascia case! I don't see anything in that statute about opening a bank account. If you read the entire section, including the short title, it's clear that it is referring to loan applications. There are no allegations in the indictment that the SPLC ever applied for a loan. There might be some FinCen reporting requirements or something that they violated, but cursory searching has failed to uncover anything that would have been in force when the accounts were opened in 2008, which incidentally creates a statute of limitations problem as well.
The money laundering charges are subordinate to the fraud charges, and are thus bogus. I predict this goes nowhere.
Inconsistent is one thing and I can see how there is wiggle room in the definition. But what they are being accused of is not just inconsistency with the mission statement, it is doing stuff directly opposed to the mission statement and directly opposed to what they said the money would be used for. From the indictment:
Here is I think the strongest example of the SPLC doing the exact opposite of what they claim to do:
If the SPLC specifically opposes this guy, and solicit donations on the basis do they really get to just turn around and give him $70k? That seems to be the exact opposite of opposing him, no?
Or to ask in terms of your Allegheny Trails Alliance example - if ATA had instead secretly donated that $10,000 to "Mr. No Trail Maintenance Ever" would your answer to "is this wire fraud" still be no? Even when the ATA explicitly told its donors "Donate to us to stop Mr. No Trail Maintenance Ever", who then went on to oppose trail maintenance according to the ATA? Because that seems to me to be closer to the story in the case of F-30, like this was not simply doing something slightly outside of their scope as in your example.
I'm going to ask you the same question I asked the other commenter: Do you believe that SPLC leadership are actually hard-right cryptoracists who have been bilking hapless lefties out of their money and used it to fund white supremacist hate groups? Or do you think this was all part of a weird, hare-brained scheme to achieve some ostensibly left wing goal? If you seriously believe that it's the former, and the government can prove that it's the former, then yes, I will agree with you and say that there is at least a decent case for fraud here. But if it's the latter, then it's just a group of people who used questionable tactics and bad judgment,
Do you believe that Jussie Smollet is actually a hard right racist who wants black people to be lynched on the street? Can you think of other reasons he may have paid some people to attack a black man on the street and put a noose on his neck?
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I think they correctly assessed that the various white supremacist orgs posed little to no actual threat, but that their activity directly benefited SPLC through driving donations and strengthened political advocacy for the policies SPLC preferred.
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No, they're straight-up grifters who have been bilking hapless lefties out of their money and spending it both to create a problem and fight it.
If that's what you think, fine, but it means that the government's case requires them to prove that hate groups aren't a problem. To an Alabama jury that's likely to have more than a few black people on it.
No. All it requires them to prove is that they paid these bad guys to make sure they were visible so that they could make money “fighting” them.
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So you're saying that even if they did exactly what I said, they'll get away with it because black people will never believe this?
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