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Heard on Lower Greenville

Question - What kind of cars do IRS agents drive?
Answer - What kind of car were you driving this morning?


BD issues a challenge to bar owners - Show us the records (click here)

HGABA operates unregistered nonprofit organization for its own benefit

Bars’s association refuses to account for estimated $60,000 in funds raised since 1999;
“tax-deductible” claims raise eyebrows at IRS and Texas AG offices

 Copyright © 2002 - BarkingDogs.org/TheDailyDog.com

Music credit: The Ketchup Song - Hey Ha - click here to see the video (in Spanish)

December 3, 2002

The Historic Greenville Avenue Business Association (HGABA) recently sponsored the third annual HGABA Par-Tee Golf Tournament at Tennison Golf Course and the Halloween Pub Crawl.

Golf tournament sponsors included Miller Brewing, UDV (J&B, Bailey’s, Guinness), Newcastle Brown Ale, and others.

Funny thing about the HGABA’s fundraising efforts -

    No one in the neighborhood remembers ever seeing money meant for the Crime watch, or has any idea what HGABA has done to improve the neighborhood.

So just what does HGABA do with the money it raises through annual golf tournaments, pub crawls, and membership drives?

And how much money is donated by beverage distributors through sponsorships to the association?

BD has absolutely no idea.

Don’t ask HGABA for an explanation – they’re not telling either.

 

Do you remember 1999?

1999 was not the best of years for Lower Greenville.

Bars were opening up faster than you could say, Who needs building permits?.

Neighborhood residents were being assaulted by drunk bar patrons on a regular basis. Driveways were regularly blocked by bar patron vehicles. Beer bottles were piled on the lawns.

The neighborhoods around Lower Greenville were becoming giant urinals for the bar patrons who had no problem whizzing on people’s homes at 2 am.

Lower Greenville was a war zone. It was the residents versus the bars.

It was Them Vs Us, and it was not getting any better.

But the residents organized quickly and effectively to regain control of their streets and quality of life.

The first wave came at neighborhood meetings and in private meetings with City officials –

    Area residents told their elected officials and DPD they wanted protection from bar patrons, they wanted more police patrols, and they wanted it NOW!

The second wave came in the form of City code enforcement sweeps – late night runs by City Staff to find any and all deficiencies in a business structure. Many were cited for illegal construction, outdoor speakers, fire code violations and more.

    The best find was at the Whisky Bar – health inspectors found bugs inside the premium liquor doing the Macarena, as one inspector noted.

Then came BarkingDogs.org, with an immense online and media publicity wave that would not go away.

    It was bad enough (for the bars) we were complaining about these issues to our city council reps, but now we could put the stories and photographs online for people around the world to read about.

Finally, city staff and elected officials stepped in and told the bar owners

    You will either do something now to protect the residents from your patrons behavior, or we will do it for you.

The bars agreed to subsidize an Extended Neighborhood Patrol / Crime watch program using money raised by the recently organized HGABA. Lower Greenville West NA would manage an off-duty DPD officer two nights a week on the west side of Lower Greenville, at a cost of $1,200 per month.

Area residents also contributed time and money to the program, working with the officers to make the best use of their resources. Nextel donated a set of phones and free service for a year. In the first few months, an average of 20 cars were towed each weekend evening from area streets.

The Old Crow promoted an HGABA golf tournament in October 2000.  According to the special events notice on their web site (with spelling errors) – (the two graphics represent abridged versions of the web site - the original images can be found at this link in PDF format or this link for the original web site ).

The Historical Greenville Avenue Business Association presents the annual HGABA "PAR-TEE" to be held at the Indian Creek Golf Course on Monday October 16, 2000

We're helping out the neighborhood Crime Watch Groups and Neighborhood Associations so swing on in to the these Greenville area locations to sign up

Did we mention it's TAX-DEDUCTIBLE?!

So come on out for a day of golf and support a
great tax deductable cause...

See you there!

The same text (with proper spelling) appears on a web site sponsored by The Beagle.

In October 2001, the Whisky Bar promoted the Halloween Pub Crawl on their web site (the complete site can be viewed at this link in PDF format or at this link for the web site) -

Halloween Pub Crawl 2001!

In celebration of all hallows eve, The Old Crow, Whisky Bar, The Beagle, Zubar and Boar's Nest in association with the Historic Greenville Avenue Business Association are hosting the Third Annual Halloween Pub Crawl on Lower Greenville Avenue on Wednesday, October 31st starting at 6:00 pm…

Tickets are $10 in advance and $15 at the door. Advance tickets can be purchased from any of the participating bars.

Proceeds go to benefit the
Historic Greenville Avenue Business Association

Since 1999, the bars have raised an estimated $60,000 for the benefit of Lower Greenville neighborhood associations, the Crime watch program, and their own association.

But over the course of nearly four years, BD and others in the neighborhood can only account for about $1,200 in money directly paid by HGABA.

None of the four neighborhood associations in the area received any money from HGABA.

Except for concrete trash containers on Greenville Avenue, reportedly donated by Budweiser, no one can point to any improvements in the area paid for by HGABA funds.

    The HGABA has been engaging in a most unique kind of theft – pocketing the money collected through a phony fundraising scam in the name of the neighborhoods they and their patrons abuse on a regular basis.

    The legal term is fraud.

 

Show us the federal paperwork

The members of HGABA really do believe they are operating as a nonprofit business association.

Last summer, during the promotion party for Da Map sponsored by HGABA members, Craig Statler of The Old Crow told BD just that.

He was damn proud of the fact that HGABA was a 501 (c) 6 [an IRS designation for a nonprofit business league] and that HGABA was doing great things for the improvement of the neighborhood.

He also told BD -

    If you weren’t such a butthead, you would make a great executive director of HGABA and help us promote the area.

Two loads of crap in less than one minute - must rate as a record somewhere.

HGABA’s by-laws state –

    The Corporation (HGABA) is organized and will be operated exclusively as a social welfare organization within the meaning of Section 501 (c) 6 of the Internal Revenue Code of 1986…

As one tax-attorney told BD -

    Saying you act like a nonprofit is like saying you are a little pregnant. Either you are or you are not tax-exempt according to the IRS. You don’t act.

The IRS defines a 501 (c) 6 Business League as -

    A business league, in general, is an association of persons having some common business interest, the purpose of which is to promote such common interest and not to engage in a regular business of a kind ordinarily carried on for profit. Trade associations and professional associations are considered to be business leagues.

    The business league must be devoted to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons. It must be shown that the conditions of a particular trade or the interests of the community will be advanced.

IRS regulations require that, at a minimum, a tax-exempt group must release their Application for Exemption and Employee Identification Number upon written request.

According to IRS regulations -

    Tax-exempt organizations must make their last three annual information returns and their approved application for recognition of exemption with all supporting documents available for public inspection.

Since September 2001, BD has made three written requests to HGABA’s officers for copies of their IRS Application for Exemption, their Employee Identification Number, and their Form 990 or other records of expenses and income, under the federal Freedom of Information Act and the IRS Taxpayer Bill of Rights.

In each case, the HGABA has refused to release those records.

Why? Because the IRS-required documents do not exist.

The HGABA has NEVER applied to the IRS for recognition as a
tax-exempt group.

HGABA has NEVER been granted tax-exempt status by the IRS.

According to a letter sent to BD by the IRS on March 30, 2002 (click on image to read complete letter) -

    We have no record that the organization [HGABA] is a tax-exempt organization under 501(a) of the Internal Revenue Code by virtue of an approved application.

You can’t show what you never had, right?

 

Let the (spin) games begin!

As soon as BD submitted his requests for records, the fun really started.

Sue Reese [Dunhill Partners], listed as the association’s corporate agent of record, resigned from the HGABA board within days of getting BD’s records request.

Shortly thereafter, Jack Chaplin (The Cavern, Daddy Jack’s and Soul II Soul) also resigned from the HGABA board.

    Not that resigning means they won’t be in trouble later.

The paperwork stalled for about six months after the first request. Then a new Board took over and BD refiled his requests.

By then, the HGABA was acting on some bad advice from their attorneys and friends.

Matt Feldman, then HGABA president, wrote BD on March 11, 2002 (click here to read the entire e-mail)-

    So far as you saying WE have to provide you records, that's not true. 

    If you want someone's tax (business, or personal) records under the "Public Records Information Act", YOU are required to contact the IRS and fill out the forms, etc. and then they will either release them, or not depending on whether or not they are of "public" record. 

    Since I can't get anything from the HGABA people I ask about this, I asked my lawyer, who then sent me to a friend, who then sent me to a friend, who knew the answer.

    His answer was that YOU can contact the IRS and they will either release, or not release the information you desire.

    He said, the Law does not require US to give you any info.

The HGABA board was also in the process of covering its own collective butt.

According to minutes of their March 13 meeting, Matt Feldman told HGABA’s membership - (click on image to see entire memo)

    The next topic discussed was BD’s request for the HGABA Records. Craig gave me the HGABA’s lawyer’s business card for all my questions.

    Dean Malouf [the previous president] filled me in on where it stands to date and what he knows about Susan Reese and Jack Chaplin resigning from the Board upon BD asking for the records.

    Marc Andres [property owner] did bring up a good point that we should look into Insurance for the Board of Directors. It’s cheap and will provide blanket coverage for any frivolous lawsuits directly naming Members.

    Everyone agreed this was a good idea in lieu of BD’s threats. James [Slaughter, Whisky Bar] said he didn’t believe we even filed taxes since we have never raised more than $25,000.

Then he noted that things were not quite so easy to cover up -

    Craig [Statler, Old Crow]made a good point that we should immediately get our books in order. It was voted unanimously that regardless of cost, to get this done.

    The Treasurer’s report was simple - We have money. When asked for an amount, outgoing treasurer Craig estimated around $13,000. [emphasis added]

Not wanting to miss taking his own shot at BD, association treasurer James Slaughter wrote BD on March 13 (in response to another request for the records) (click here to read entire e-mail) - [Slaughter resigned as HGABA’s treasurer after this e-mail was sent, reportedly to put more time in working his Austin operation].

    Everyone at our meeting was curious. Why do you want our tax records?

    We paid Bill off [Note 1]. Why do you care? What's the point?

    And for your information, we will never show you any of our records. If you need a copy, you can petition the IRS just like you did with the City of Dallas [Note 2].

    Have fun and good researching.

    Also, FYI because of your continued "bullying" two of our Directors have withdrawn their positions.

    Two points for the neighborhood bully.

    Bad for the HGABA and the neighborhood because we really need their support.
     

    • [Note 1 - The comment about Bill refers to HGABA cutting off their support of the off-duty DPD officer program, due to the bad publicity generated by the high number of arrests of bar patrons. Right after Bill was paid by Marc Andres, the HGABA and property owners wanted the residents to approve their own idea of neighborhood protection – the Extended Bar Patrol.]
       
    • [Note 2 - This refers to BD’s review of City of Dallas audits of some Lower Greenville bars alcoholic beverage sales ratios. Slaughter gave the City a copy of his monthly sales tax report, assuming that as state records they were confidential.
      The City Attorney punted to the Texas Attorney General, who ruled that sales tax records submitted to any other agency but the State Comptroller were subject to release under the Open Records Act.]

    When Lower Greenville West NA’s CrimeWatch coordinator, Bill Dickerson, did receive money for the off-duty patrol, it was in the form of individual bars paying by check directly to him or having the HGABA officers give him their checks. Although at the beginning of the program, several bars were supporting the Crime watch, there were many months when just one bar was paying the full amount.

    Getting the money was an event in itself, finding Bill being sent on a wild goose-chase between bars where the right person to sign the check was inexplicably absent from the office.

HGABA’s greed is not limited to their own money. At the end of last summer, Daddy Jack Chaplin donated $1,000 to the Lower Greenville West NA for use in any way they saw fit - Crime Watch, cellphones, whatever.

When HGABA members found out about this largesse, the board demanded that this $1,000 be applied to the nearly $3,500 debt they had accumulated by not reimbursing Bill and LGWNA for the neighborhood patrol program Bill supervised. Only major chain yanking by Jack, Bill and BD kept HGABA’s hands off the money.

    In the course of nearly 18 months of payments, Bill can document just one check from HGABA written on an HGABA checking account, for just $1,200.

Two weeks later, an e-mail meant for the entire HGABA membership was accidentally sent to BD. In it, Matt Feldman noted (read complete e-mail here) -

    From the last HGABA Meeting, we determined that we had around 13k in our account. Add in the $ we made at the very successful, St. Patrick's Pub Crawl, and that's a lot of $ just sitting there for a rainy day.

    Even if it cost us $1,500 per month during May, June, July, August, and September (our busiest months), that still doesn't put a dent in the funds that we are just saving for a rainy day.

    I think it should be like the Federal Budget, everything we make (?) the year before should be budgeted to be spent the following year.

    There's no reason we have sooooooo much $ just sitting in an account when we have AT LEAST 2 crimes per day being committed in our area.

    Every year, we have two very successful Pub Crawls, a Golf Tournament, and a Member Drive.

    Without getting too into the finance side, we should have plenty of $ to fund this if we choose so. Just think about what these events net.

    I'd be shocked if it was less than $8,000 per year, and what do we use it for.

    Maybe paying our Lawyer, or Accountant to get the books in order, but the rest is just waiting for the rainy day.

    I'm not saying that we shouldn't have a buffer, but I can't foresee where we would need a $17,000 buffer.

BD forwarded this information and other documents to the IRS, where more than a few eyebrows were raised.

On April 16th, the IRS sent a letter to BD -

    Thank you for the information pertaining to the Historic Greenville Avenue Business Association (HGABA).

    The IRS has an ongoing program of examining exempt organizations to ensure compliance with the applicable provisions of the Internal Revenue Code. The information you submitted will be considered in this program.

    The disclosure of the status of an investigation is prohibited by section 6103(b)(2)(A) of the Internal Revenue Code.

    Please accept our apology for the delay in responding to your request and for any inconvenience this may have caused you or your organization.

    Thank you for your interest in this matter.

BD previewed this article to an IRS investigator in October. The investigator (from the IRS’ Tax Exempt division) confirmed that HGABA was still not registered with the IRS as of that date. Additionally, the IRS was seeking a current mailing address for the group, since the address on the Texas Comptroller’s web site, among others, was invalid. BD gladly gave them the office address of the current association president.

    The IRS agent wanted to make sure that our information had nothing to do with the Greenville Avenue Area Business Association.

    GAABA represents businesses mostly north of McCommas up to Southwestern Blvd. and sponsors the annual St. Patrick’s Day Parade every year on Upper Greenville Avenue.

    GAABA is properly registered with the IRS and is extremely reputable.

 

They ignored a letter from the who. . .?

Acting on some of his own free legal counsel, BD sent a summary of his research to the office of Texas Attorney General John Cornyn. The AG’s Consumer Protection Service is responsible for investigating fraudulent charity activities under the Texas Nonprofit Corporations Act.

HGABA was chartered as a Texas Corporation – with Sue Reese as the Registered Agent – in February 1999.

A very complete and easy to understand explanation of the rules regarding operations of a nonprofit association in Texas can be found online at the Weblocator Law Index link.

The State Comptroller web site notes that HGABA is not in good standing as it has not satisfied all state tax requirements.

In May 2002, AG staff notified BD that they had sent a letter to HGABA’s attorney

    ...regarding their obligations under the law and requested some general information regarding their obligations under the law and requested some general information regarding their understanding of these responsibilities.

As of August 2002, the HGABA attorney had not yet replied to the AG’s letter.

Excuse me??

As one attorney told BD –

    There are three letters you never ignore – anything from the IRS, anything from your ex-spouse, and anything from the state’s Attorney General.

The AG’s staff sent another letter to the HGABA – as of press time, BD had no information confirming that HGABA had replied to this letter.

 

The HGABA is not your ordinary business association

Is it “No comment” when they refuse to return your call?

Prior to the 2002 HGABA Golf Tournament, BD contacted two of the sponsors - Miller Brewing Corp. (the Dallas office deferred to them) and Newcastle Brown Ale.

BD had a long conversation with Michael Hennick, Miller’s Director of Communications.

After BD explained the issues and background, Mr. Hennick promised to research the matter and get back to us.

He never did.

BD also traded E-mail with Bill Wetmore, Commercial Director for Scottish and Newcastle Importers. He stated

    One of my colleagues in Texas organized our participation with this organization. As she is on a business trip overseas this week, I'm not able to confirm whether or not the tax status of the organization was verified.

Mr. Wetmore never confirmed the status to BD.

BD sent another E-mail to both persons just before the event took place, asking for a formal statement explaining how they sponsor a group and whether they verified HGABA’s tax status.

Neither one replied to our inquiries before this story was posted, even though they had two weeks notice in advance.

In late October, BD contacted Willow Distributors, a sponsor of the Halloween Pub Crawl. They also did not respond to letters and phone calls about this issue.

HGABA was created in 1999 to promote Lower Greenville business interests, and included not only bars but some daytime retail business activities and property owners.

In a June 1999 Dallas Observer article, the HGABA was described this way -

The group of about 15 or 20 bars, restaurants, and other businesses has been cleaning up the streets after weekend nights and launching a campaign to get customers to cut down on the littering, rowdiness, and--that most Greenville of activities--peeing in the neighbors' yards.

"We've printed up a logo: 'Honor Thy Urban Neighborhood,'" says Slaughter. "There are areas in New York and Chicago with residents living close to stores, bars, that kind of thing. I think that's why people move down here [to the Greenville area]," he says. "We have to get people who come here on the weekend to be more responsible in the way they treat the neighborhood." He says the association members--and other business owners--have attended neighborhood meetings, participated in crime watches, and generally tried to get to know and care about the neighbors.

The daytime retail folks quickly left the group when it became obvious that the only business interests driving them were bar interests.

Soon HGABA became a mouthpiece of the bar owners fighting the residents who were vehemently protecting their neighborhood by doing unfriendly things like buying streets under Resident Only Parking regulations. Bye-bye bar patron parking.

The group is not organized like a normal association. The  original members of the group - including Whisky Bar, Daddy Jacks, Dunhill Partners, Old Crow, Nuevo Leon and others - created a Board of Directors that has final approval on any decisions made by the membership and its elected board.

This board includes the most rabid of the anti-neighbor bar owners, with Statler (Old Crow) and Slaughter (Whisky Bar) leading the fight to screw the neighborhoods on a regular basis.

This fighting is not without its lighter moments. When large planters were stolen off Bill Dickerson’s porch, they miraculously reappeared on Slaughter’s Whisky Bar patio.

After verifying that the planters were stolen (they had been marked on the bottom by Bill in preparation for an estate sale), the DPD visited with Slaughter.

He claimed the planters were purchased at Home Depot and he had a receipt for them - somewhere. The DPD gave him a few days to find the paperwork.

But before Slaughter could cough up the receipt, the planters disappeared again and have not been seen since.

 

Meet the stooges?

If having Sue My husband Lou went to jail so I would not Reese on your Board of Directors does not make you worry about the money, then consider this:

    The HGABA membership elects a slate of officers - approved by the Board - who have no power to make decisions or sign checks. They simply hold meetings and mouthpiece the Board’s decisions.

During all his dealings with HGABA, the last two presidents bemoaned to BD the fact they they had no access to the records that were controlled by the Board.

Even that minimal control has been changed. At a meeting in August, the Executive Board reorganized the association - there would be no more meetings and all decisions of the Executive Board (which could not be questioned) would be communicated after the fact (See - Am I not turtley enough for you?).

Member bars (the total count is nearly 20 members) pay at least $150 per year in dues, plus host various events that benefit the association.

The recently canceled Extended Bar Patrol was not paid from HGABA funds. Property owners Dunhill Partners and Andres Property added a cam charge to each business’ rent - approximately $50 per month by one estimate - to pay nearly $2,500 for two off-duty officers to patrol Lower Greenville (and not the neighborhood, as was originally agreed to).

 

Time for some fallout?

The “Historic Greenville Avenue Business Association” is neither historic nor an association - discuss among yourselves

Most of the bars in HGABA are less than eight years old. The word historic simply does not apply to these young punks.

But Bill Dickerson, LGWNA Crime watch, definitely qualifies as “historic” in Lower Greenville terms.

Until the unscheduled fire nearly three years ago, Bill had a major presence in the old Antique Mall. His partner grew up in the same house they now occupy just two blocks off Greenville.

He was a member of the original HGABA group, until things started going south between the bars and residents.

Bill has also been assaulted at least eight times in the past three years by bar patrons while on Crime watch patrols.

He can name from memory almost all the previous occupants of the locations currently occupied by bars - many of which were not (despite the bar owners claims that Lower Greenville has always been an entertainment mecca) bars prior.

So in order to protect what little integrity there is on Lower Greenville, and to keep HGABA from making another fast buck, Bill has purchased the domain names HGABA.org, .net and .com for future businesses on Lower Greenville - like when many of these bars are gone.

HGABA.org is now pointing to BarkingDogs.org.

BD has estimated that HGABA is hiding nearly $60,000 in funds raised since 1999. That figure is based on three annual golf tournaments, six pub crawls, nearly four years’ worth of membership dues, confidential information and records given to BD, sponsorship donations and other events.

The HGABA’s claim that golf-tournament fees are tax-deductible is illegal, according to IRS regulations, since HGABA is not a registered tax-exempt group. Anyone who made a donation to the group, including businesses who donated food and beverages, and then claimed that deduction on their income tax filings, were also violating IRS regulations.

Only IRS-approved charities and employee associations can state that donations to their group are tax-deductible.

Business organizations are specifically required to tell the public that donations are not tax-deductible.

The IRS web site states -

    Section 6113 provides that certain tax-exempt organizations that are not eligible to receive tax deductible charitable contributions must disclose in "an express statement (in a conspicuous and easily recognizable format)" that contributions to the organization are not deductible for Federal income tax purposes as charitable contributions.

    This provision applies to organizations that are not eligible to receive deductible charitable contributions and are described in either § 501(c),§ 501(d), or § 527.

Like BD noted earlier, HGABA has been getting some bad legal advice for years. And after a while they actually believe it.

We may never know where the money went. By the time you read this story, the records have already been flushed into a restaurant grease trap - in tiny little pieces.

The money is long gone, apparently spent on things not even vaguely related to Lower Greenville. It is probably floating up someone’s nose in the form of a white powdery substance.

But it sure was not put to any good use in the neighborhood.

    $60,000 would have paid for an off-duty officer in the Lower Greenville area every weekend since 1999.

As noted earlier, the IRS is already investigating the HGABA. But until we see any bar owners doing the perp walk down Greenville Avenue, we will never know what the IRS finds.

According to NonProfits.org, the penalties for failing to open up records of legal organizations are quite severe

    The penalty for failure to allow public inspection or provide copies of information returns was increased from $10 to $20 per day [in 1999], with a maximum penalty of $10,000 per return. This penalty applies to "any officer, director, trustee, employee, or other individual who is under a duty to allow inspection or provide copies."

    The penalty for failure to allow public inspection or provide copies of exemption applications was increased from $10 to $20 per day with no limit. This penalty applies to "any officer, director, trustee, employee, or other individual who is under a duty to allow inspection or provide copies."

These penalties apply only if the organization is officially recognized by the IRS as a nonprofit group.

In the case of HGABA, no such recognition exists. That leaves the organization and its board members (even the ones who resigned last year) subject to state and federal charges of tax-evasion, fraud, misrepresenting the purpose of the charity to federal and state regulators and contributors, operating as a charity without proper paperwork from the IRS, and more.

In 2001, the Texas AG obtained an injunction against another bogus charity, seeking restitution, attorney fees and civil fines and penalties.

Other cases reviewed online refer to prison time being assessed on the leaders of charity scams.

The HGABA board members can also count on the IRS auditing their business and personal tax returns for a certain number of years to determine if they took any of the funds for their own use.

Oh, we can only hope?

It would also be up to the IRS to prosecute any company which donated services or products to HGABA in return for a nonexistent tax deduction, as well as any individual who claimed a tax deduction on their annual return.

    When BD secures the HGABA records, they will be posted online along with an objective review prepared by an accountant who has no connection or relationship to Lower Greenville.

    Of course, BD is now looking for an independent CPA to provide these services gratis. Send BD an E-mail if you want to help.

More information as this story develops.