This week, we get some expert legal guidance and draw up a plan of action. If you want to reach out to us, please email us at mail@luginbilled.com or on our contact page at www.luginbilled.com! Cool & Unusual Punishment is a member of the Nerd & Tie Network! Find more shows from N&T at their website in the show notes. As always, thanks for listening!
Luginbill Children's Foundation Corporate Records
What Nonprofits Need to Know About IRS Form 990
Tyler: you're listening to Cool and unusual punishment. This is Episode 11 of Luginbilled, our special series on the music man of Eau Claire. My name is Tyler Haas. And sitting across from me, my two co hosts Jodie Arnold and our cat. How are you guys?
Jodie: Oh, you know, one of those days. That's Kitty's answer.
Tyler: Where you don't wanna wake up. Everything sucks. That’s a Limp Bizkit song.
Jodie: Yeah. No, I'm good. I am ready to go.
Tyler: People have said our podcast is all about the He said she said bullshit.
Jodie: There's only facts.
Tyler: Okay. The episode really recording after this will be 100%. he said she said bullshit.
Jodie: Yeah, we got to get through this one first.
Tyler: This professional stuff first?
Jodie: Yeah.
Tyler: Jodie, you've been on the phone all weekend. I trust you have a story for us?
Jodie: Nah. I was just on the phone for other stuff.
Tyler: Thanks for listening.
Jodie: No, I do have a story. And I was on the phone quite a bit this weekend and it was much appreciated because there's been quite a few times now where I have relied on the expertise of others to help guide me. And I made good use of that this weekend. This story is going to piggyback off of the Leader Telegram story that came out on October 28th of 2020. I actually had shared it to our page. It's called “Luginbill Foundation, now dissolved, Still being investigated by the Eau Claire Police.” How I'm going to do this story is I'm going to read to you the news story, and then I've got starred some places where I'm going to address some stuff. Okay. Eau Claire, One year after the inquiry began, the Eau Claire Police Department is continuing a financial investigation into the foundation begun by former Eau Claire School Board President Joe Luginbill. The police departments financial crime detectives began an investigation into the Luginbill Children's Found Foundations finances in October 2019. “A community member gave the department information about the foundation's founder, Luginbill, and suspicious financial transactions.” Josh Miller, E. C. P. D public information officer, said in January. Okay, so that's the first place I want to stop.
Jodie: I want to talk about that community member, and I want to talk about the known...the things that I know about the investigation, which aren't much. So if we go back to Episode five of Luginbilled. That was the Charity Fundraising episode. I did go back in the show notes to pull up the email that had been sent on September 16th of 2019. That was the one where Charity Fundraising sent Joe the ‘be guided accordingly’ email.
Jodie: So there is no misunderstanding. If a tracking number for certified funds of $1950 is not received by me within three days, Charity Fundraising will sue you and your organization for the $1950 owed, as well as Charity Fundraising’s attorney fees and relentless pursuit efforts. be guided accordingly. Charity Fundraising.
Jodie: They sent this email, you know, basically like a last ditch effort to get their money before they were going to pursue legal action. And if you recall from that conversation, Joe paid the money almost like the next day. But on September 27th of 2019, charity Fundraising had a conversation regarding this issue with Eric Torres, who was at that time the school board president. Because if you recall, the school board had been CC’d on a couple of the last emails that Charity Fundraising had sent. At some point, they stopped sending them just to Joe, and they started, including the whole school board-
Tyler: Yes.
Jodie: Which is not a dumb idea. The part that I didn't mention, when we were doing that Charity Fundraising story, was the part where Charity Fundraising had a call from the Eau Claire Police Department. A woman who identified herself as a detective with financial crimes, and wanted to know about the transactional history of what occurred between that organization and Joe. I do know that there is indeed a woman working this case from the Eau Claire Police Department as a detective, so that certainly checks out. It was in December. I almost wanted to say it was Christmas Eve, but I can't be for sure if I remember the date. I wanted to bring that up because we don't know who the community member is, that came forward-
Tyler: -That kicked off the investigation.
Jodie: Yeah, in October, October certainly happened very quickly after September, right?
Tyler: Yeah. Yeah, as it’s wont to do.
Jodie: I realized as I was saying that how dumb it was. My point being that, all of this stuff had really come to a head in the middle of September. Suddenly, in October, there's a tip that's good enough for the police department to open an investigation on. And in December, Charity Fundraising, who was a paid business partner of Joe's, gets a call regardless.
Tyler: Right. Because it didn't become a legal matter or anything.
Jodie: Yep, they got paid. The other curious part was that Eric Torres told me, at the time of our conversation prior to doing that story, that no one on the school board had been contacted at that time, anyway, by the Eau Claire police department. Which I would assume hearing that that it's a good chance nobody on the school board was responsible for going to the police.
Tyler: Okay.
Jodie: That's interesting wording. Um, nobody has been contacted by the police department from the school board.
Tyler: Yeah, I don't know carefully, Eric Torres chose his words, but that leaves open a technical loophole.
Jodie: Yeah, there's just certain parts about this story that I can't compartmentalize, one of them being: how did the detective get the information about Charity Fundraising? Why did they reach out to somebody who had been paid? All of the correspondence here is sent to Joe only, the only people outside of Joe who for sure we know, know about it, was the school board, because they wanted to have a closed session board meeting where they addressed this issue with him. And he didn't show up and instead resigned from the school board. All of those board meeting opportunities were happening as this investigation was opening. How strange that a few months later it's Charity Fundraising that gets a call from the detectives. makes me wonder.
Jodie: “The case is still open and being investigated,” Miller told the Leader Telegram Friday, citing the number of projects Luginbill was involved in for the length of the ongoing investigation. Two weeks ago, on October 13th, 2020 papers were filed with the Wisconsin Department of Financial Institutions to dissolve the Luginbill Children's Foundation, according to W. D. F I records.
Tyler: Are we doing an episode after this? I'll start making notes about questions.
Jodie: We can.
Tyler: I have my notebook that is designated the notebook for big, dumb questions about Joe Luginbill.
Jodie: Okay. This news story does go on to talk a little bit more about the W. D F I records, but the act of dissolving the foundation does not get further explained in here. The W. D. F. I. is the Wisconsin Department of Financial Institutions. So on the 13th of October, this process was put into place. We'll have a link to the W D F I page for the Luginbill Children's Foundation. There is available to anybody for free, some very basic information about nonprofits. So it will show you the trajectory, kind of the story of the nonprofit. So for Luginbill Children's Foundation, 12/6/2016 they were incorporated. 10/1/2019 they went delinquent. 10/13/2020 there was a notice of an administrative disillusion that was filed on 12/13 of 2020. Next to it, it says it was returned on delivery.
Jodie: The W D F. I, um, did what's called an administrative dissolving.
Tyler: That might answer my first question here. Okay.
Jodie: They did that on their own and they sent notice to the foundation and it came back “Returned undeliverable.”
Tyler: Got you.
Jodie: Typically, entities that failed to file an annual report after several years are subject to being administratively dissolved by the WDFI. Attempts are made to contact these entities by U. S. Mail. If the mail cannot be delivered, the entity name is published in a notice of administrative disillusion. If the WDFI does not receive an annual report within a given period of time, the entity will be dissolved and it will appear on the certificate of administrative disillusion list.
Tyler: It's Polaroid goes up on the W. D F I Wall of shame right next to the front door.
Jodie: I would guess that there are some nonprofits that get started and don't go anywhere and also don't think to, like dissolve themselves. And eventually they get dissolved because they're not filing annual reports and because they're not doing that, they fall on the delinquent list, which is where Joe was on 12/1 of 2019. And then I imagine there was these attempts to contact.
Tyler: Yeah, we've seen what those emails look like.
Jodie: So that's what that is and what you will see. The next thing that comes up with the news story, “the move comes nine months after Luginbill said in a January statement to local media that he would dissolve the foundation.” So he didn't do that. And I think it's important-
Tyler: Can you believe it?
Jodie: I mean, you have to have a gross amount of negligence to get to the part where the WDFI in Wisconsin has to decide you're going to dissolve. It’s just a matter of time, and it's a matter of procedure. And how many days until we have to go to the next action. It has nothing to do with the investigation. But I think the two things got put together and, well, the issue of suspicious financial transactions, well, definitely when you see that there's been no annual reports, I don't know what those look like as far as what the WDFI expects of you, but-
Tyler: I believe there's a box that says profit, colon, and you say none and you mail it out.
Jodie: IRS records show the foundation filed for nonprofit status in May 2018, but the IRS revoked the foundation's federal tax exempt status on February 15th of 2020. Organizations can have their tax exempt status revoked for not filing a Form 990 reporting their charitable distributions for three years in a row, according to the IRS. Next thing, what's a 990? How do they work? And what's significant about the fact that he filed none? That's the next thing I wanted to branch off of with this story.
Jodie: Number one: tax exempt nonprofits don't have to pay federal taxes, but they do have to file information with the I. R. S. That's the 990 form. Having to file the 990 makes sure that nonprofits conduct their business in a way that is consistent with their public responsibilities.
Tyler: Now you're saying the foundation did not do this?
Jodie: They never did it. The 990, which must be made public, also provides an easy way for donors and other people interested in supporting a particular cause to find and evaluate the best charities to support. In a way, the 990 can be a public relations tool for a charity when care is taken to fill it out correctly and carefully.
Tyler: You know what? Instead of making comments, I'll just put the circus music backing track behind all this.
Tyler: How long? How long When was the charity founded?
Jodie: 2016. But their status, like with the I. R. S, that happened until 2018. So you go three years in a row without in 990 you are going to become a problem for the IRS.
Tyler: Gotcha.
Jodie: An organization can clarify its mission on the 990. It details its accomplishments of the previous year. A donor can find out where the group gets its revenue. A foundation can see just how sustainable the charity might be. A prospective board member, In this case, it would have been his family, can see who else is already on the board.
Tyler: You can just look around the living room too.
Jodie: All of that information, and more can be found on the 990, making this form useful for anyone researching nonprofits. The IRS can evaluate nonprofits how they operate just by examining their 990s. I understood that 990s hadn't been filed. I knew that it had been three years. The 990 is also would show how much money you've made in donations, you know-
Tyler: Suffice to say, this would be a short investigation and an even shorter podcast series if the 990s were filed because everything we actually want to know would be in the 990s.
Jodie: Yeah.
Tyler: Gotcha.
Joddie: All right, then this news story we're going to cruise along, “In a January statement to media, the last time Luginbill has spoken publicly,” and by spoken publicly, he released a statement, “about his Eau Claire projects, he said he planned to pass the running of the State Theater and the renovation of the Smile house to quote ‘other entities and organizations that could see them through.’ In that statement, Luginbill said he worked on the State Theater and smile house projects without receiving salary and without any employees, but that financial donations did not cover the cost of both projects.”
Jodie: One of the most popular questions we get asked, there's a lot, number one: where is Joe Luginbill? Maybe we could talk about that in the bonus episode. Another question is, where did the money go? The problem with that question is that we don't know on the front end of that, how much money was there? As far as we know, he made money off of fundraisers because there was correspondence with two different Charity Fundraising type groups requesting the like, retail value of celebrity signed items or whatever. I don't see in the documentation anywhere how much that item sold for, but I know it's sold for something above that because they're asking for that base amount.
Tyler: Right, these were auctions, so we don't know how much they sold for. Therefore, we don't know how much money he made at these fundraisers.
Jodie: Right. And so that was just one piece of the fundraising pie. So I spoke with a lawyer yesterday who has worked on cases involving white collar financial crimes. I wanted to know about financial investigations, and he was very helpful in explaining some of these things to me that I want to explain to the listeners about how financial investigations work, how long they can take. But then some other things came as a result of this. And we'll get to that.
Jodie: The most beneficial thing he told me was to think of police departments as hospitals. You've got heart attacks, but then you've got sprained ankles. They're both coming in at the same time, a case like this one is a sprained ankle.
Tyler: Is it a sprained ankle because the alleged crime is not big enough to warrant more attention, or because they lack the resources to properly investigate it, it becomes lower on the priority list?
Jodie: Well, both of those things are probably true to some extent, but it's sort of like your house is on fire and your roof needs repair. Well, I guess the roof might irrelevant now, but the house is on fire.
Tyler: I’m just curious because that opens up a conversation about, like are the things they consider the house being on fire sort of cases like... drug busts?
Jodie: Yes.
Tyler: That's a whole other conversation about where police focus their resources. But there's more direct day to day crimes where they're putting their attention.
Jodie: And, well, you have a big, huge drug bust that can be profitable.
Tyler: You get a photograph with all the bindles on the table.
Jodie: Yeah. I mean, these are the realities of white collar, financial crime. The victims in that are not bleeding. You know what I mean? This is all theorizing that I feel pretty good about it. The other thing that people need to consider in a case like this, there's a paper trail that's largely non existent that we are assuming as such right? There's no 990s, the W. D. F. I. doesn't have their annual report, whatever that looks like. There's evidence we know of that suggests well, if they didn't file a 990, that's because they didn't want to.
Tyler: Yeah, because yeah, if knowing that not filing a 990 would lead to their dissolvement and they still chose to not file a 990 that means they probably made the calculation that it is more important to not file a 990.
Jodie: With that lack of paper trail, you would need to get a forensic financial investigator, and that would have a very tedious process of combing through bank records. Because even if there's no documentation on these formal things, like a 990 or whatever a nonprofit would use for managing their finances-
Tyler: Uh, yes, and to be if you were a forensic financial investigator, to be coming through bank records, if that's what they were going to do, that requires probably like warrants or whatever allowances give you access to-
Jodie: Like a subpoena-
Tyler: Exactly.
Jodie: -and records and things. And maybe the aEau Claire police department is doing this because even if you don't have a paper trail in quotes, checks need to be cashed. There are copies made of checks. So somewhere there are transactional histories of deposits, withdrawals. What that lawyer also told me, is that banks can also file what's called an SAR, suspicious activity report. And sometimes they're nothing. There are eccentric people who go to the bank every day and withdraw money. But sometimes they are something. You could have one on you. And you have no idea that it was the case. Well, the lawyer I spoke with said the services of ah, forensic financial investigator cost around $30,000. Okay, that lawyer felt pretty certain that wasn't happening in this case,
Tyler: Based off of the size of...
Jodie: -The police Department. Yes, The urgency to throw those kinds of resources is at this. And that's the other part of this is we've come at this story from so many angles. And while many of the angles in some way involved financial stuff, we've really not addressed the elephant in the room, which is without financial records or a means of scrutinizing what is available, what happens with a case like this? And it's not only what happened to the money, but how much money are we even talking about? Joe could have said he raised 50 grand at a fundraiser. But is that true? I think people assume that he was traveling around Europe. He did things like that and it was funded on this money. But we don't know how much money there was right?
Tyler: Also, in terms of our podcast, like a lot of stories that we tell our stories about actions that tiptoe very close to the line of being a crime.
Jodie: right? Yes. That's another thing, you know. How can this guy still be walking around? Well, there's an investigation going on number one. Number two, being a shitty person doesn't necessarily mean you're gonna go to jail for it. When I was talking to this lawyer, his feeling based on his experience, this story, and this case are the equivalent of sitting under a pile of magazines in the waiting room that's collecting dust on top of a bunch of Newsweek's or something.
Tyler: He, I'm assuming, was familiar with the story on the whole, Like he-
Jodie: Yes, he was familiar with the podcast. He's from Eau Claire, knew about Joe before this story happened. During this conversation yesterday, it occurred to me, everybody who donated to the foundation, if you aren't going to find all of these people by way of bank records, you could still find some of them, if you just asked. Talking to this lawyer, I realized maybe the way to come at this and in some way put pressure on the police department. If you want to see justice served and you're angry about this, this is a way for you to do something about it.
Jodie: So, the idea is how big is the pie? How much money did the foundation ever make? I personally have some people helping me out with a couple of potential big donors that allegedly gave a lot of money that might be willing to help out here. But there's also a lot of people who gave $50. If we know how much money was on this end of it, then we know how much money needs to be accounted for. Right? And it also gives faces and names to the people who gave that money. You know-
Tyler: Victims, I think you would call those people.
Jodie: Yes. When I first heard about the investigation, I thought, well, if someone donated the money, they don't need to do anything. The Eau Claire Police department will find them.
Tyler: They’ll track down their leads and-
Jodie: Right. But honestly, will they?
Tyler: If they don't have records of those transactions, then it would be very difficult for them to find those people.
Jodie: Yeah. I think that people might be more empowered to propel this investigation forward than they realize they are. If we could collectively gather names of donors, then we would have an operating list of people that are victims. Your money was not used how you intended it. There are things that you can do to empower yourself to not only see justice served, but also- not every nonprofit is this nonprofit okay? There's no reason for you to feel ashamed because you gave to this one. It's like the many stories that we've told about people.
Tyler: Yeah. A lot of these stories involve Joe escaping accountability by virtue of the people he’s taken advantage of feeling embarrassed. If there were a collective list of people who donated to the foundation, not only are we filling out this pie that we have no idea how big it is, but also putting real names to people who were victimized, instead of it being a story about Joe being a bad nonprofit manager in a sort of abstract way that is not connected to the community he was a part of.
Jodie: What I want to do is collect names and amounts of money. I will keep those confidentially to myself and then give those to the Eau Claire Police Department. One of the things that the lawyer and I were talking about is there's not a lot of public pressure and right now, it’s just this abstract thing. But if you have 100 people, 100 people or whatever saying, “I gave money and I want to know what happened to it.”
Jodie: And I don’t have a stake in this. I don't have a personal vengeance against Joe, but I do want the people who donate money to have some sort of action. You might be able to decide what goes on with this. I think it's important that this doesn't happen again for all of these stories that we've told in which there is no legal action attached to it, the thing that can have an outcome, I think there's a lot of people who would like to see it. So yes, I'm asking you, if you donated money, I'm going to start building a list. Maybe this goes nowhere. Or maybe people decide that they will tell me. I feel like by now listeners should be able to trust that my intentions are to do with this information is the only thing I will do with it.
Tyler: Yeah, I don't know how much agency or how big our platform might be. I do certainly think that after 10 episodes you have demonstrated how respectful you have been of people's desire for anonymity, etcetera. Joe escaped financial accountability because of his refusal to do the paperwork that would hold him accountable.
Jodie: Yeah.
Tyler: The thing that Joe was hiding we can find that out to some degree, thanks to the people he took advantage of.
Jodie: Yes. Yeah, that's what I want to do. So if you have donated $20, if you get 100 people that say they donated $20 collectively speaking, that's money right? That's a scholarship that didn't get paid.
Tyler: You might not feel obligated to investigate this white collar crime with this young kid. But 100 people in your community that were the victims of this scheme, that is something worth investigating.
Jodie: Yes.
Tyler: We can't speak to what the investigation looks like or how it's going. But a list of names to follow up on might help.
Jodie: Yeah, and this is not a scrutiny on the investigation. This is an acknowledgement of very typical situations like this. And so I think at this point, just tell me how much you gave and if you can remember when, because I want to know if this is even something that I could do.
Jodie: So, there you have it.
Tyler: I think we're gonna put together something, a more proper campaign to elevate this request?
Jodie: Yeah.. But for the listeners now, you know, share this on your page when it comes out, you know. You maybe were at an event and you have friends, you know, send them a message with it and say, “Hey, they're looking for people.” You know.
Tyler: We should point out you could message us on our Facebook page, of course. You can also email us at mail at Luginbill dot com. You and I are the only eyeballs that read those emails. You can find us on Patreon, we're going to take a little break here and then record a little bonus episode that you can listen to and join in on at Patreon dot com slash cool and unusual punishment. P a T r E o n dot com. Pledge A few bucks, it goes a long way to supporting us. Tell a friend so that we can form a collective army of people looking for justice.
Jodie: Yeah. Thanks for listening.
Tyler: Luginbilled is presented by cool and unusual punishment. Research and interviews by Jodie Arnold. This episode was edited and mixed by me, Tyler Haas. Music by Geoff Harvey, Rick Dickart, Xavly, John Wright and Yoav Alyagon. Special thanks to Trae Dorn and the entire Nerd and Tie Podcast network, you can find our show along with a ton of other fantastic Wisconsin based podcasts at Nerd and Tie dot com. If you enjoy this show and want to help support us, please take a minute to review us on iTunes or wherever you listen. At the time of this recording, we are also a nominee for Volume one's “best local podcast.” So if you're hearing this before December 8th, you can head over to volume one dot org and give us a vote. It's either incredibly important or completely overrated, depending on whether or not we win it. You can also pledge a few bucks on our Patreon page to get early and exclusive episodes. Or you can join the discussion on our Discord channel. You can find links to both in the show notes. Our website, where you can find links to the material and documents we reference is Luginbilled dot com.
Tyler: The listeners can't see the look on your face where you’re… without saying anything you’re like “God, can we get back to, fucking adult shit, here?”