Justia Non-Profit Corporations Opinion Summaries

In 2020, an activist named Sir Maejor Page created and operated a Facebook page for an organization called Black Lives Matter of Greater Atlanta (BLMGA), which he registered as a nonprofit in Georgia and obtained tax-exempt status. After failing to file required tax forms for three years, BLMGA’s tax-exempt status was revoked, but the organization continued to appear as a nonprofit on Facebook and receive donations. Following the death of George Floyd, donations surged to over $490,000. Page assured donors that the money would support protests and related activities, but he instead used the funds for personal expenses, including luxury items, a house, home renovations, firearms, and hiring a prostitute.The United States District Court for the Northern District of Ohio indicted Page on one count of wire fraud and three counts of money laundering, alleging he defrauded donors by misrepresenting the intended use of their contributions. At trial, Page testified in his defense, but the jury found him guilty on all counts. During sentencing, the district court adopted the U.S. Probation Office’s recommendations, overruling Page’s objections regarding obstruction of justice, loss amount, and number of victims. The court imposed a sentence of 42 months’ imprisonment on each count, to run concurrently, followed by three years of supervised release.The United States Court of Appeals for the Sixth Circuit reviewed Page’s convictions and sentence. The court held that there was sufficient evidence to support the wire fraud and money laundering convictions, finding Page’s misrepresentations induced donations and that the funds were used for personal benefit. The court also upheld the district court’s evidentiary rulings and sentencing enhancements, concluding there was no plain or prejudicial error. Accordingly, the Sixth Circuit affirmed Page’s convictions and sentence. View "United States v. Page" on Justia Law

Kevin Clay and his associate founded a pharmaceutical sales company that marketed compounded prescriptions directly to patients, promising them a share of the insurance reimbursements for each prescription filled. The company partnered with a pharmacy willing to pay a portion of the insurance proceeds and recruited employees from a local business whose health plan covered these prescriptions. Patients were directed to a doctor who readily prescribed the creams, resulting in millions of dollars in reimbursements over two years. Clay established a public charity to reduce his tax burden but used its funds for personal expenses and failed to comply with nonprofit requirements.The United States District Court for the Northern District of Ohio oversaw Clay’s trial. A jury convicted him of conspiracy to commit healthcare fraud, healthcare fraud, and making a false statement to the IRS, but acquitted him of a separate tax charge. The court sentenced Clay to 51 months’ imprisonment and ordered restitution totaling nearly $7 million to both Fiat Chrysler and the IRS. Clay appealed his convictions, sentence, and restitution orders.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed Clay’s convictions and rejected his challenges to the jury instructions and evidentiary rulings. However, it found error in the district court’s restitution orders and the application of a sentencing enhancement. Specifically, the Sixth Circuit held that restitution should not include payments for medically necessary prescriptions and that the apportionment of restitution must consider each defendant’s contribution and economic circumstances. The court also determined the restitution order to the IRS was not properly substantiated and included acquitted conduct. Finally, the case was remanded for further proceedings on restitution and for clarification or reconsideration of the leadership sentencing enhancement. View "United States v. Clay" on Justia Law

Detroit Medical Center consists of several not-for-profit hospitals incorporated under Michigan law. The Center overpaid its taxes, entitling it to a refund plus interest. Under the Internal Revenue Code, “corporations” receive lower interest rates on such refunds (the federal short-term interest rate plus as little as 0.5%) than other taxpayers (the federal short-term interest rate plus 3%), 26 U.S.C. 6621(a)(1). The IRS rejected the Center’s claim that, as a not-for-profit corporation, it should not be treated as a corporation and should be eligible for the higher interest rate, increasing its refund by $9.1 million. The district court and Sixth Circuit affirmed, reasoning that a nonprofit entity incorporated under state law amounts to a corporation, and that the Code contains no indication to the contrary. View "United States v. Detroit Medical Center" on Justia Law