"Aggressive entrepreneurs" or white collar criminals?

The Free Press/May 9, 2000

[Excerpted portion of article]

Austin - Violent crime keeps dropping, but the National White Collar Crime Center says that one in three households is now victimized by white-collar crime. This genteel robbery has increased 10 percent to 20 percent in the last five years. The Securities and Exchange Commission, which goes after investment fraud, reports a 20 percent jump in complaints from 1995 to 1999.

The Internet is an especially rich source of rip-offs, so you cutting-edge netizens need to follow the oldest rule in the book: If it sounds too good to be true, it is.

But of course what interests me most is legal crime, the rip-offs about which absolutely nothing can be done -- often because Our Elected Representatives have been bought off by the system of legalized bribery that runs American politics.

Here's a little beauty that the feds HAVE tried to stop; it's an especially noxious case because it's done in the name of charity.

The Wall Street Journal did a lovely expose last week on the National Heritage Foundation of Falls Church, Va. Here's the drill: Donors entrust their money to this outfit, which sets up individual accounts that are like foundations, but at the fraction of the cost in lawyers' fees, etc. The donors then get an immediate tax deduction for their gifts and are encouraged to use the money in their accounts to pay themselves and their families salaries and expenses for running the charity.

Is this great, or what? The guy who runs the outfit, J.T. Houk, cheerfully describes himself as a disciple of "charitable entrepreneurship" and decries what he calls "the charity poverty syndrome," which is to say that he thinks volunteers should be paid.

In the case of Houk himself, he says he makes about $12,000 a year and his wife, son and daughter-in-law, all "paid volunteers," make about $166,000 total. It also covers his travel expenses to Palm Beach, where he maintains an office.

In 1998, National Heritage took in about $128 million in revenue and disbursed $3 million to outside charities, according to tax records. The people who put their money into this scam claim to be supporting some of the most cockamamie "charities" you ever heard off. Houk has about 4,000 "charitable investors."

The IRS sued Houk back in 1982 over a similar outfit he was running while teaching in the economics department of Jerry Falwell's Liberty University. That outfit ousted Houk and changed its name. But in 1994, Houk started the National Heritage Foundation, which preaches against the evils of big government and in support of other right-wing tenets.

According to The New York Times, "Besides getting a cut of the fees levied on donors' accounts, financial planners who generate a lot of business for National Heritage have also been rewarded occasionally by having foundations set up in their own names at National Heritage's expense. Planners may also use foundations to pay themselves for raising funds for charity."

Ain't that a beaut? Good luck to all you suckers still paying taxes out there. Too bad you didn't think of paid volunteers.

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