Watchdog Requests IRS Investigate True the Vote for Enriching Key Employees and Directors
FOR IMMEDIATE RELEASE: June 5, 2023
Contact: Michael Clauw, firstname.lastname@example.org, 202.780.5750
WASHINGTON, D.C. – Today, Campaign for Accountability (CfA) requested the IRS and the Texas Attorney General’s office investigate whether key employees and directors of Texas-based nonprofit True the Vote, Inc. (TTV) improperly diverted funds from the conspiratorial vote-monitoring group. Catherine Engelbrecht, TTV’s President and Executive Director, appears to have violated federal and state law by taking loans from the organization and making excessive payments to former director Gregg Phillips’ business and General Counsel Jim Bopp’s Law Firm. TTV also failed to adequately disclose these and various other payments on its Form 990 tax returns—raising suspicions as to whether TTV intended to conceal the payments from the IRS and the public.
CfA Executive Director Michelle Kuppersmith said, “While Catherine Engelbrecht and Gregg Phillips traveled the country hysterically demanding audits of vote counts despite any evidence of fraud, it’s True the Vote’s books that merit forensic examination.”
TTV’s Form 990 filings reveal that the organization advanced large loans to Engelbrecht, an officer and director, multiple times while she served as a director to the nonprofit. Texas law permits nonprofit corporations to make loans to employees or officers in limited circumstances, but specifically prohibits loans to directors. In addition, TTV loaned Engelbrecht more than the 50% of an employee’s annual salary that the law allows. In 2019, TTV’s originally filed Form 990 showed that Englebrecht held $113,396 in loans from TTV, despite a salary that year of $145,000.
CfA’s complaint also highlights payments to a for-profit entity owned wholly by former TTV director Gregg Phillips that appear to have exceeded the fair market value of any services that he may have provided TTV. Phillips’ OPSEC Group was slated (according to a donor solicitation) to “aggregate and analyze” voter data for ‘Validate the Vote 2020’—TTV’s planned effort to supposedly substantiate voter fraud claims. Although TTV effectively abandoned ‘Validate the Vote 2020’ within a few days of its inception, TTV nevertheless paid OPSEC Group $750,000. The payments to Phillips’ business may violate the tax code prohibition on private inurement.
Notably, there are previous allegations against Phillips for allegedly diverting hundreds of thousands of dollars to himself or his business entities. The Mississippi legislature accused him of having approved an $878,000 contract for a company he worked for when he served as the head of the Mississippi Department of Human Services, and he was accused of conflicts of interest when he profited from a $670,000 Texas state contract awarded to a company he founded while serving as the deputy commissioner of the Texas Health and Human Services Commission.
TTV also made exorbitant payments to General Counsel Jim Bopp’s the Bopp Law Firm for legal support it provided around the ‘Validate the Vote 2020’ initiative that appears to have fallen far short of the initially planned goals for the organization. While TTV planned numerous lawsuits, it dismissed its few cases shortly after filing what a TTV donor lawsuit characterized as nearly identical complaints. Nevertheless, TTV paid the law firm fees more commensurate with continuing litigation. Additionally, TTV failed to appropriately disclose the payments to both OPSEC Group and The Bopp Law Firm on its Form 990s.
As president of TTV, Engebrecht signed TTV’s tax returns, which include numerous material errors and omissions related to its transactions with Phillips’ business and other diversions of its income and assets. By voluntarily and intentionally filing false, incorrect, and incomplete Form 990s, Engelbrecht may have committed tax fraud.
While CfA is unable to access all relevant underlying business records (e.g., contracts, invoices, receipts, intercompany communications etc.) to accurately determine if fair market value services were indeed supplied to TTV, the IRS—with its summons, investigatory, and other enforcement powers—could compel the production of such information.
Ms. Kuppersmith continued, “The publicly available records suggest Engelbrecht directed money donated to TTV by unwary supporters to herself, Phillips, and the Bopp Law Firm and then failed to properly disclose payments in violation of the law. Federal and state authorities should immediately investigate, issue all appropriate fines and penalties, and, if the facts support it, refer the matter for criminal prosecution.”
Campaign for Accountability is a nonpartisan, nonprofit watchdog organization that uses research, litigation, and aggressive communications to expose misconduct and malfeasance in public life and hold those who act at the expense of the public good accountable for their actions.