In 6 years, $500,000 in donations to SIST

Tax records show revenue from construction services, volunteer labor; major balance discrepancy

The Shawano Leader/October 12, 2004
By Tim Ryan

While plans for an international boarding school in the Town of Wescott have been talked about since 1998, financial records for the Dr. R.C. Samanta Roy Institute of Science and Technology (SIST) indicate that the institute has funded and operated a school located in India for at least 10 years.

Tax returns filed by SIST show that the non-profit organization took in more than $1.74 million in revenue for the operation of that school between 1997 and 2002, had more than $325,000 in expenses, and ended up with a fund balance of $1.88 million.

The Leader obtained a number of financial records and other information that is in the public record about the institute, which is listed as a 501(c)(03) public charity with the Internal Revenue Service.

SIST has not claimed a tax-exempt status on its properties in the City of Shawano or the Town of Wescott. City and town officials say that all of Samanta Roy's properties are on the tax rolls and that taxes on those properties are being paid.

IRS tax returns show that the institute took in close to $500,000 in contributions between 1997 and 2002, and more than $1.2 million in revenue listed as construction services.

The tax returns do not directly explain what is meant by construction services. However, according to the returns, the revenue is claimed as non taxable income under Exclusion Code 02 in the list of General Exceptions that apply to revenue for a non-profit organization.

That code states that revenue is tax exempt if it is income produced by at least 85 percent unpaid labor.

SIST uses the same exclusion code in the tax returns for income generated by gross profit from the sale of inventory.

"The income is tax exempt if at least 85 percent of the labor is from volunteers," explained Brian Strnad, a certified public accountant with Schenck Business Solutions in Green Bay, who examined the tax returns for the Leader.

He said the exclusion also applies to any businesses that might be owned or operated by a non-profit organization. "If you're operating a business, you're going to end up paying taxes unless you can exclude the income under an exclusion code," Strnad said.

Other than his review of the tax records, Strnad was not familiar with Samanta Roy's operations or property purchases. His comments were in reference only to the factual information in the tax documents and general rules that apply to 501(c)(03) organizations.

Based on his review of the documents, Strnad said the only thing out of the ordinary is a $413,383 discrepancy between the tax return filed in 2000 and that filed in 2001.

The tax returns show that SIST ended the calendar year 2000 with a fund balance of $177,638, yet somehow started calendar year 2001 with a fund balance of $591,021.

Strnad said it is possible that there was an amendment filed and not included in these returns that might have accounted for the discrepancy.

The organization's return lists assets going into 2001 that were not listed in the 2000 return. The 2001 tax return was the more thorough Form 990, while in previous years the organization had filed Form 990-EZ.

The 2001 return shows assets of $1.24 million in the category of land, buildings and equipment. In 2002, assets in that category were at $2 million.

All but one year of the tax returns are signed by Kal Gronvall, who is listed as chief fiscal officer for SIST. The 2000 tax return is signed by Darlene Sense, who is listed as a secretary on the institute's Board of Directors.

Gronvall did not respond to requests for an interview. Calls placed to Sense's home last week were not answered. Also, officials of SIST did not respond to several letters last month seeking information about its activities.

IRS tax returns available for SIST go back to 1997, when the organization started the year with a $50,891 fund balance. The most recent return available covers the calendar year of 2002.

SIST claimed $995,453 in revenue during 2002, and $98,510 in expenses. The institute's assets at that time were reported at more than $2.37 million. Liabilities - mostly outstanding mortgages - were listed at $489,128. The institute's fund balance was reported as $1.88 million.

According to the tax return, SIST took in revenue of $175,616 in contributions in 2002, listed on the return as direct public support. According to the return, none of the individual contributors gave more than $5,000.

The 2002 return lists $782,106 in revenue from construction services. SIST also took in $24,205 in revenue in 2002 listed as rental income, and $13,477 profit from the sale of goods.

The 2002 tax return lists total expenses of $98,510, including $77,915 in administrative costs, $20,595 for program services -- $10,650 of that listed as salaries and wages - and a $2,135 vehicle expense, among other costs.

SIST lists its mission as the operation of a school in India. While the tax returns do not give an address or say where in India the school is located, information provided by former followers indicate that the school is located in Jatni, in the District of Khurda, State of Orissa. The school was apparently established in 1992.

The 1997 tax return states that the school is based on the American system of education. All subsequent tax returns drop the word "American."

The institute is required under IRS law to be an equal opportunity school to qualify as a 501(c)(03). Comments included in the tax return state: "The school is in India and is open to everyone. The school's policies are stated in newspaper advertisements."

SIST has been listed with the IRS as a non-profit organization since 1996. Tax returns going back to 1997 show contributions of $175,616 in 2002; $46,346 in 2001; $62,280 in 2000; $79,379 in 1999; $65,019 in 1998; and $69,747 in 1997.

Revenue of $421,511 from construction services is also listed in the 2001 tax return but not in any of the previous years. Together with the $782,106 claimed on the 2002 return, SIST took in more than $1.2 million in construction services during those two years.

Records show that SIST also took in $948 profit from the sale of goods in 2001 and $4,485 in interest income from savings and investments.

The most recent financial information for the institute comes from Experian Business Reports, which reflects only payments and not income. The report showed the institute with a balance of only $1,300 on May 3, 2004 after expenses for building materials in August 2003 and office equipment in April of this year.

The Leader also obtained records on the institute filed with the Wisconsin Department of Regulation and Licensing. According to the DRL, the institute was incorporated on March 31, 1994, and filed with that agency on May 31 of that year as a charitable organization.

Documents from the DRL show that in 1995, the organization took in $83,929 in contributions. That is the only year for which the DRL shows any financial information on the institute.

In 1995, according to the DRL, SIST had $40,951 in expenses for program services, and $3,122 for management and general expenses. The charity had a year end net worth of $50,891 - the same amount listed as the beginning of the year balance in the 1997 federal tax return.

The listing of the institute with the state as a charitable organization was withdrawn in August of 1997. It remains listed with the Wisconsin Secretary of State as a non-stock corporation. Its registered agent is Naomi Isaacson.

Isaacson is also listed as the registered agent for Midwest Amusement Park, LLC, and Midwest Properties of Shawano, LLC, both of which were established in 2003. Midwest Properties has purchased 10 properties in the area since it was established.

Records show that on July 30 of this year, SIST took out three mortgage loans totaling $680,000 with Midwest Properties providing as collateral properties it had purchased at N5660 and N5654 State Highway 47-55, and 951 E. Green Bay St.

Samanta Roy signed the mortgage documents as a managing member of Midwest Properties.

Isaacson, an attorney based in Minneapolis, Minn., is one of 10 members of the Board of Directors of SIST, of which Samanta Roy is president.

Other board members listed in documents filed with the tax returns include Dr. Rivka Rachel of Frederick, MD; Dr. Laureen Ballinger of Minneapolis, Minn.; Dr. Jill Yungerberg of Brooklyn Park, Minn.; Attorney Rebekah Brown of Columbia Heights, Minn.; Kal Gronvall of Lakeville, Minn.; Roger Sindt of Rochester, Minn.; Bruce Scott of Kilkenny, Minn.; and Darlene Sense of Shawano.

The tax records also show that from 1997 through 2000, board members also included Samanta Roy's son and daughter, Robie I. Samanta Roy and Deborah Rebekah Samanta Roy.