Two New Jersey men could soon be facing serious criminal charges of tax fraud and consumer fraud. They were reportedly using a charity to avoid paying taxes on several dozen luxury cars that were purchased.
One man was the president of the charity while the other was the secretary. A state investigation revealed that the president established the charity back in 2005 using several different aliases. The charity's website claimed that it had connections with a local cancer center. However it appears that no donations were made from the charity to the center.
It is state law for charities to report annual finances and income. In additional, federal law states that charities can only claim their tax-exempt status on items that relate directly to the charity's purpose.
The state alleges that the charity and the two men who have been charged failed to comply with state and federal law. Their records show that the charity never reported annual income and assets. But the biggest accusations surround the purchase of more than 60 luxury cars in the charity's name.
The two men have been accused of using fake IDs to purchase the vehicles; the total cost was several million dollars. Additionally, they allegedly used the charity's tax-exempt status to purchase the vehicles so that they would not have to pay the sales tax. And while the secretary signed a document stating that the vehicles purchased were to be used for the organization's purposes, the state does not believe that this was the case.
Now the two men have been arrested. Currently the lawsuit is demanding that they repay the consumers who may have given money as well as pay fines for violating the Consumer Fraud Act. While the article does not mention criminal charges, these could be brought sometime in the future.
Source: Statehouse Bureau: "Two N.J. men used fake charity to export luxury cars overseas, Attorney General says," Christopher Baxter, Oct. 13, 2011