Ma’o Tosi: Pattern of Poor Judgment
******UPDATE FEB 20th 11:55 PM******
Yesterday, Ma’o Tosi appeared on Dave Stieren’s KFQD radio show. During the course of the interview, Stieren asked him about his tax issues. Tosi assured him everything was fine:
“…Our CPA has filed the extensions for our taxes within the non-profit so those aren’t issues as far as filing…”
When LKB spoke to Mrs. Somebody at the IRS (after being on hold seemingly forever) she was very thorough in questioning her about “extensions” and the rules involving 990s. According to the IRS:
A) A non-profit’s 990 is due the 15th day of the 5th month after the close of the accounting period (May 15th for a “calendar year filer”)
B) They can file for two and only two extensions — both of which are three months in length. So, the maximum amount of time a non-profit can put off filing their tax form 990 is 11 months.
There is no way that AK PRIDE could LEGALLY have not filed their 2011 and 2012 forms.
Today, Alaska Dispatch’s Sean Doogan interviewed LKB (a very confrontational interview) regarding this article. During that interview, LKB pointed out that Tosi’s story, where “the extensions were filed” and there is no issue there, could not possibly be accurate.
Doogan actually questioned Tosi about that. His response:
“Tosi does not dispute that, but he says his group is working to file the returns and is scrambling to catch up with its paperwork after its former bookkeeper left abruptly in 2012.”
There was no follow-up…like pointing out that “not disputing it” means he’s been giving a false impression in his interviews, that 2012 was two years ago, things like that.
We at Mudflats believe that Mr. Doogan should stop wasting time being confrontational with us and more time being confrontational with the candidate, whose explanations just don’t add up.
If you would have told us that we at The Mudflats would be writing about APOC violations and IRS irregularities in connection with charismatic community activist Ma’o Tosi, we would have called you a fibber. The editorial staff knew of him as many others did – someone who cared about, and worked with at-risk kids.
We were as intrigued as anyone else about his decision to run for the Anchorage Assembly’s east side seat. His name has also been bandied about as a potential mayoral candidate. Over the last several weeks, we have been doing our fairly typical vetting of a new political figure entering the public stage, and have been saddened by the results. It seems that Ma’o Tosi’s non-profit, AK PRIDE, has serious tax status problems. It doest inspire confidence in a candidate for a body whose primary job is dealing with budgets and other important fiscal issues of the Anchorage Municipality.
Mr. Tosi’s problems are not just ongoing federal tax issues; there is also currently a complaint filed against him with the State of Alaska. Lisa Demer wrote an excellent piece on the 15-count Alaska Public Offices Commission (APOC) complaint filed yesterday. It’s true that APOC rules can be very confusing, but some items were as common-sense as not using your corporate business/non-profit telephone as your campaign number. That issue and most of the others listed in the complaint never would have been a problem had Mr. Tosi read the APOC literature they provide to every new candidate. Even if he had wanted to keep his last-minute filing a secret, he could have had someone associated with his campaign attend one of the numerous candidate trainings APOC puts on before every election. We were stunned by how many rules were broken in just 12 days.
As east-side resident John Lewis stated in his complaint, “Mr. Tosi has violated Alaska’s campaign disclosure laws with nearly every campaign activity and communication that his campaign has undertaken.”
As concerning as so many potential APOC violations might be, the primary cause for alarm is the number and the nature of alleged violations of IRS tax law for non-profit 501(c)(3) agencies. The ADN does a good job of listing most of them, but for those who do not understand non-profits (which is most people), further explanation might be necessary.
Per the ADN:
“Tosi’s Alaska Pride hasn’t filed a disclosure since 2010 even though the organization received state earmarks approved by the Legislature in 2010, 2011 and 2012. The amounts were $80,000, $100,000 and $300,000, respectively, and all the money has been spent, according to Scott Ruby, director of the Division of Community and Regional Affairs.”
“The program hired part-time staff to work with kids and operated out of the mall in leased space, Tosi said. He also received a salary, $50,000 in 2010, according to that year’s report to the IRS.”
Non-profits, except in very limited cases (none of which AK PRIDE seems to fit), are required to file a version of a yearly tax disclosure called a Form 990. We’ll discuss what we know about their finances year by year, starting with 2010.
According to the 9990-EZ filed by Tosi’s 501(c)(3) non-profit for 2010, AK PRIDE’s “contributions, gifts, grants and similar amounts received” totaled $50,000.00. That was listed as the group’s total income. The form lists their only expense, “Professional fees and other payments made to independent contractors” as the same amount — $50,000.00. On the page listing the members of the Board, Board President Ma’o Tosi was identified as the contractor that was paid the $50,000.00.
There are two big problems with this filing:
1) As it states in the article, Ma’o Tosi’s AK PRIDE received an $80,000.00 grant from the Legislature that very same year. Through a little digging, we also found that Kaladi Brothers made a donation the same year to AK PRIDE of $6,314.37. So, was the $50,000.00 part of the State grant? Was it in addition to the grant, and the grant wasn’t listed? Where does the $6,000+ from Kaladi Brothers fit in? In any event, the total for 2010 is incorrect. That could potentially qualify as a “fraudulent return” according to the IRS guidance on non-profits, Pub 557. Maximum penalty: $10,000.00.
2) It is possible (and often happens) that board members of non-profit organizations are paid moderate fees for services provided to the organization. However, every (reported) cent that came into AK PRIDE went directly to the board president, Ma’o Tosi. According to IRS Regs. 1.501(c)(3)-1(c)(2): “An organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private individuals.” The last 990-EZ filed in 2010 was not the only one where every cent of reported donations to AK PRIDE were paid to Ma’o Tosi. The ones filed in 2009 and 2008 reflect the exact same situation.
One big question left hanging from 2010: Where did the other $36,314.37 go?
Per the ADN:
“In 2011 Alaska Pride was the charity picked by the Today show for Al Roker’s Lend-A-Hand series, receiving $1.8 million to $1.9 million in gifts, services and money. Tosi said only $30,000 of that was a cash donation from the program, in which Roker traveled to various cities to benefit charities.”
2011 was the most complicated and profitable year for AK PRIDE, and also the first year that there is no Form 990 of any type on file with the IRS. AK PRIDE received over $1.8 million in goods, services, and cash from the Lend-A-Hand organization. The fact that allegedly only $30,000.00 was in cash makes no difference, according to the IRS. The 990 has a place to list the value of all non-cash (also known as “in-kind”) donations as income.
Also in 2011, the ADN article mentions that Tosi’s organization received a grant from the State of Alaska for $100,000.00. What it doesn’t mention is that was only part of the funding for that project. According to the State Funding Request, while AK PRIDE was asking for $100,000.00 from the Legislature, it had already received $175,000.00 towards the $275,000.00 project.
Municipality of Anchorage — $100,000.00
Rasmuson Foundation — $25,000.00
United Way — $40,000.00
CIRI — $10,000.00
Adding it up with:
Lend-A-Hand — $1,829,332.00
State of Alaska — $100,000.00
= TOTAL for 2011 –$2,104,332.00
(This is not counting random donations or the money and frequent flyer miles the Today Show continued to collect on their website for AK PRIDE.)
Maximum penalty (per IRS Pub 557) for not filing a Form 990 on $1,000,000 or more — $50,000.00.
Per the ADN:
“He said he thought a staff member had taken care of the filings after 2010 and only realized in late 2012 that didn’t happen. Since the 2012 award, he hasn’t sought more funding and is paying for the rented space and a part-time worker himself, he said.”
In 2012, AK Pride received another grant from the Alaska Legislature, this time for $300,000.00.
However, Tosi’s claim that he “hasn’t sought more funding” since 2012 is (putting it nicely), not accurate.
AK PRIDE submitted two grant requests for FY2014 with the Alaska Legislature:
— One request was for $400,000.00 to be put towards, “After School Program and Employment Training for Low-Income Youth and Families”
— The second was for the, “Kaladi Community Development Center for Alaska Youth and Families.”
According to the funding details:
“Kaladi Bros and Mao Tosi’s Alaska PRIDE will match $2,000,000 through partnerships with:
Local Businesses (BP, Shell, ASRC, CIRI, etc.)
United Way of Anchorage
Municipality of Anchorage”
We don’t know if he had secured matching funds, because both of these requests were turned down. Why Tosi claimed he never filed them is puzzling because a few months ago he cited the fact that they were turned down as the reason he was thinking about running for mayor:
“‘I am frustrated by the process. I ask for $2 million for a community center in Mountain View, and was turned down, then I watch as more than $7 million is spent on new indoor tennis courts. So I began thinking, why don’t I run for office?’ Tosi said as he watched a dance workshop for kids at the Sullivan Arena on Saturday.”
Per the ADN:
“Tosi said he hasn’t heard from the IRS about the separate issue related to Alaska Pride’s remiss in filing its annual returns as a tax-exempt organization.”
He wouldn’t have heard yet, but he will if he doesn’t get in gear. There is still time. According to the IRS Pub 557 and Instructions on Form 990, AK PRIDE actually has until the 15th day of the 5th month after the end of the organization’s accounting period. For AK PRIDE, that is May 15th.
If Tosi lets that day pass without a 990 filing for 2013 or without the organization officially requesting an extension, that will be the third year in a row that they did not file.
The Penalty: automatic loss of the organization’s non-profit status.
There have been two journalistic pieces done on the APOC complaint/tax issues against Tosi. In the comments of both of them (as well as FB posts linking to the articles), we see folks attacking the messengers – as if Lisa Demer and Sean Doogan made it up. While we understand folks will be skeptical of anything to do with APOC until the hearings are held and the penalties announced, the IRS problems are pretty cut-and-dried thanks to required non-profit disclosure. Mr. Tosi is potentially in big trouble, make no mistake about it. Those of us pointing this out are doing so because he cannot be an Assembly Member with this level of financial ignorance and disregard for the law.
Perhaps the anger would be more appropriately directed at Republican political operative Rick Mystrom and all of those Trombley supporters who convinced Ma’o to run. They don’t care if he was ready or not, or if he didn’t know enough to clean up any existing messes before putting himself under the inevitable scrutiny all candidates receive. They just wanted someone to pull votes from Democratic candidate Pete Petersen. Split the vote, and the conservative will win in a district with distinctively non-conservative voters. Tosi and his non-profit are just collateral damage to them.
Unfortunately, they mean much more than that to the kids they serve.