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Lessons from the Alavi Foundation

 

You can’t always tell a book by its cover. And you can’t always tell a nonprofit by its 990.

When I first saw the headlines Thursday in the Washington Post, I assumed it was another counter-terrorism story. The story reported that “federal prosecutors took steps Thursday to seize four U.S. mosques and a Fifth Avenue skyscraper … long suspected of being secretly controlled by the Iranian government.”

But this was not just a typical terrorism story; it included a nonprofit and a foundation. “In what could prove to be one of the biggest counterterrorism seizures in U.S. history, prosecutors filed a civil complaint in federal court against the Alavi Foundation, seeking the forfeiture of more than $500 million in assets. The assets include bank accounts; Islamic centers consisting of schools and mosques in New York City, Maryland, California and Houston; more than 100 acres in Virginia; and a 36-story glass office tower in New York.”

John D. Winter, a partner at Patterson Belknap Webb & Tyler in New York City and the Alavi Foundation’s lawyer, is quoted as saying that the foundation will fight the case.

The story reports that “prosecutors said the Alavi Foundation managed the office tower on behalf of the Iranian government and, working with a front company known as Assa Corp., illegally funneled millions in rental income to Iran’s state-owned Bank Melli. Bank Melli has been accused by a U.S. Treasury official of providing support for Iran’s nuclear program, and it is illegal in the United States to do business with the bank.”

The U.S. has long suspected the foundation was an arm of the Iranian government; a 97-page complaint details involvement in foundation business by several top Iranian officials, including the deputy prime minister and ambassadors to the United Nations.

“For two decades, the Alavi Foundation’s affairs have been directed by various Iranian officials, including Iranian ambassadors to the United Nations, in violation of a series of American laws,” U.S. Attorney Preet Bharara is quoted as saying.

I asked Chuck McLean, GuideStar’s VP of research, to see what he could learn. “We have the 990-PFs going back to 2000 for the Alavi Foundation. I have reviewed their most recent filing. There is nothing apparently wrong on the return, and they retain a well-known and reputable law firm as general counsel. Their primary activity at the present time is making no-interest loans for the construction of mosques and religious schools.”

The moral of the story? Nothing in the 990s pointed to the issues that the government has identified, and other previous government anti-terrorist charges have not always been supported in court, so this issue is far from resolved. Although an organization’s Form 990 can provide a wealth of information about its activities, it is more like a self-portrait than an x-ray. Truly understanding a nonprofit requires more information than the 990 can provide.

Bob.jpg The preceding is a guest post Bob Ottenhoff,  Chief Executive of the Center for Disaster Philanthropy. With an entrepreneurial spirit, strong technology focus, and a quest to make an impact in the world, Bob has the ability to take an organization and lead it into strong performance, sustainability, and industry leadership.

Topics: Legal Nonprofit
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