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Jury Awards $30 Million to Nonprofits That Alleged Fraud Against Wells Fargo

Posted on by Adrienne Gonzalez

The Minneapolis Foundation, the Minnesota Medical Foundation, the Robins Kaplan Miller & Ciresi Foundation for Children and the Minnesota Workers’ Compensation Reinsurance Association have won $29.9 million from Wells Fargo in a Minnesota case that alleged investment fraud and breach of fiduciary duty based on investments the non-profits made that were deemed safe by Wells Fargo.


While similar cases against banks have mostly been settled out of court, this is the first time one such case has gone to trial.

Though the non-profits lost $14.1 million to these shoddy investments, Wells Fargo attorney Robert Weinstine blamed it on the financial crisis and insisted it was not Wells’ fault that funds were lost. The 10-member jury felt otherwise based on internal memos, e-mails and handwritten notes admitted as evidence in the trial.

The jury determined last Thursday that the bank would not be subject to additional payments for punitive damages. Attorney for the four non-profits Mike Ciresi had requested $100 million. Mathlete and Wells Fargo attorney Larry Hofmann told jurors that “zero is the correct number here” in terms of punies.

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The IRS Is Giving Small Nonprofits One Final Chance to File Their 990s

Remember the IRS’ failed outreach to small nonprofits back in the spring? Yeah, the May 17th deadline threw a lot small NFPs for a loop and they up and missed the filing deadline completely.

IRS Commish Doug Shulman figured that, despite the unprecedented outreach, the whole snafu was his bad and that nonprofits shouldn’t worry their pretty little heads about missing the deadline, the Service will still take your 990, tardiness notwithstanding.

But that can’t go on forever now, can it? Accordingly, the IRS set a new deadline today to file the 990s and it’s set for a much more memorable October 15th.

WASHINGTON — Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program, the Internal Revenue Service announced today.

The IRS today posted on a special page of IRS.gov the names and last-known addresses of these at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates between May 17 and Oct. 15, 2010, but the IRS has no record that they filed the required returns for any of the past three years.

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” IRS Commissioner Doug Shulman said. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”

It’s simple people. If your gross receipts are under $25,000, get yourself a 990-N (e-Postcard), fill it out and you’re done. If you have receipts up to $500k, you’ll have to fill out either Form 990 or 990-EZ which will probably take you all of 15 minutes.

Get it? No more blowing this off. OCTOBER 15TH is the drop dead date. After that, Shulman & Co. will be busting down the doors to inform you that you’re no longer tax exempt. And trust us, you don’t want to deal with that.

IRS Offers One-Time Special Filing Relief Program for Small Charities; Oct. 15 Due Date to Preserve Tax-Exempt Status [IRS]

What Would the Nonprofit Sector and Community Solutions Act Accomplish?

Representative Betty McCollum is upset that small businesses have the Small Business Administration but nonprofits don’t get a Nonprofit Administration to evaluate, build and monitor the capacity of America’s vital nonprofits. She believes nonprofits are an invisible but vital part to the economy and overlooked by Washington, DC except when it comes to tax issues.

She writes in the Hill:

This legislation represents a significant step toward creating a more effective partnership between the federal government and the nonprofit sector. H.R. 5533 establishes a new United States Council on the Nonprofit Sector. The Council will be a forum for leaders of nonprofits, foundations, businesses and government to discuss strategies for strengthening the nonprofit sector. The bill also creates an Inter-agency Working Group on the Nonprofit Sector. This group will ensure that high-level representatives from cabinet agencies and other key agencies coordinate and improve federal policies pertaining to nonprofit organizations. Finally, the legislation directs Federal agencies to collect and publish better data on nonprofits AND to support research that will lead to smarter Federal policy.

The goals of the Nonprofit Sector and Community Solutions Act are to build a stronger nonprofit sector, craft smarter federal policy, and create more vibrant communities in every state across the country.

Listen, we love working groups as much as the next cube-dweller but haven’t yet seen a copy of the Bill so can’t say either way at this point. What we do know is that the nonprofit sector is large enough to be in need of some help beyond whatever pestering they get from our friends at the IRS.

According to a 2009 Congressional Research Service report, nonprofits (mostly charities) make up over 5% of U.S. GDP. Charitable organizations are estimated to employ more than 7% of the U.S. workforce, while the broader nonprofit sector is estimated to employ 10% of the U.S. workforce. In 2009, nonprofits filing form 990s with the IRS reported approximately $1.4 billion in revenue and nearly $2.6 billion in assets.

Those numbers do not include the estimated 215,000 charities who have neglected (or completely blown off) their 990 responsibilities.

Update: Ms McCollum’s office was kind enough to get in touch and provide us with more information and a direct link to the Bill. We look forward to seeing how this works out.