Main Menu

Tag Archives | Maricopa County Sheriff’s Office

Posse Gate

I’ve focused on financial questions about the Maricopa County Sheriff’s Cold Case Posse. They are a private non-profit,  tax-exempt corporation, and their finances remain shrouded in mystery with no reporting to the Sheriff’s Office, the State of Arizona or the IRS.

We’ve learned that there are 3,000 members of  Sheriff Joe’s various posses. Exactly what that association is remains murky, and it appears that they are either independent or closely associated depending on whatever is convenient in a particular situation. When it comes to emphasizing the authority of the Cold Case Posse, they are hand-in-glove with Sheriff Arpaio, but when it comes to financial oversight, they are totally independent.

I’m sure some of the MCSO posses do great work in search and rescue, and are a credit to their community. On the other hand, the financial shenanigans and lack of transparency I’ve found with the Cold Case Posse are not unique, nor are they new. For example:

Undie-Gate (1996-1998)

imageYou may have heard that Arpaio made inmates wear pink underwear, but did you know that his posses sold souvenir versions, the proceeds from which were hidden from the public? A Superior Court Judge said that because they were independent, Arizona’s open records law did not apply to them and they didn’t have to explain where the money went. Read the story at the Phoenix New Times:

Banned ‘Birther’ Breaks the BR Censorship Barrier

The Cold Case Posse’s “Universe Shattering” Evidence

Opinion: By Brian Reilly To: Kevin Davidson, Dr. Conspiracy

Once again, America is being told by Birther news outlets that new, universe shattering evidence about the Obama investigation will be released by Commander Mike Zullo and his non-profit, all volunteer, Cold Case Posse in March, or possibly April or possibly May or, possibly never, depending on who the Birther spokesperson is for the day. Even if new evidence were released this month, the Cold Case Posse has cried wolf so many times, who really is going to listen, except hardcore, agenda driven Birthers?

But wait a minute…..Brian Reilly…..isn’t he a Birther? Why is he writing to Dr. Conspiracy??? I’m glad that you asked. I’ve been banned at many Birther websites, including Birther Report. Many Birther sites put my comments into an endless, black cavern of moderation with my comments never seeing the light of day or the courtesy of a reply or a posting. My comments don’t fit the Birther narrative. On one particularly nefarious Birther website I’ve read threats and defamatory statements directed toward me for simply speaking my opinion. Do these tactics sound familiar? I came to Dr. Conspiracy’s website because, I had no other choice. I believed that he would give me the freedom to write and publish my thoughts. I was right. I am grateful for Dr. Conspiracy’s courtesy.

Yes, Dr. Conspiracy has me listed on his Birthers A-Z list, but I have never considered myself a Birther. I simply had questions about President Obama’s birth certificate, based on the PDF I saw posted on April 27, 2011 on the White House website. Many wanted answers as did I. But no, I don’t consider myself a Birther. Continue Reading →

Forensic accounting of the Cold Case Posse

About a month ago, I alluded to an investigation into the Cold Case Posse and said that some results could be expected in a month. I now have the expected information as promised.

In March of 2007, Mike Zullo as “Commander” of the Cold Case Posse applied to the IRS for exempt status. The IRS preliminary determination of the Maricopa County Sheriff’s Cold Case Posse, Inc. states that it is not required to file Form 990 (financial reports), that it is a § 501(c)(3) tax exempt organization, and that it is a public charity under § 509(a)(2).

The IRS determination seems reasonable based on what Zullo told the IRS, and what Zullo told the IRS seems reasonable based on the original intent stated at the Posse’s creation in 2007.

The question that I raise now is whether the IRS determination is still appropriate. In order to obtain exemption from filing public financial reports on Form 990, the CCP had to submit a narrative describing itself. It hypothetically describes itself as “organized as a separate entity of the governmental unit that created it.”1 In that narrative, very little is said about financing, only:

The individual posse members, just like volunteer fire fighters, donate their time and efforts to solve these [cold] cases without expecting or receiving compensation.

and

Lastly, it should be noted that members of the applicant are all individually responsible for the costs necessary to pay for any and all equipment and uniforms that they may need to fulfill their duties to the sheriff’s department and any necessary equipment needed for their safety.

imageAs I read this, the Cold Case Posse represented to the IRS that it wouldn’t have any expenses. That reading is confirmed by explicit expense estimates on their Form 1023 Application for Exemption for tax years 2007, 2008 and 2009: $0. They also specifically state that no one with the Posse would receive compensation. That immediately raises a question for me because for each of those tax years, the CCP estimated revenue of $6,500 from “membership fees.” Why did they estimate $19,500 in revenue for the three years, but no expenses? What were they going to do with that money? If the IRS wondered the same thing, they approved the Application anyway.2

Part of classifying an organization involves its sources of funding. In 2007 all the funding was projected as coming from membership fees. Is that still true today? We simply do not know how much of their revenue today comes from membership fees and how much from the Sheriff’s Office (such as county cars, gas cards and deputy trips to Hawaii) and how much from non-member donations.

In 2007 no expenses were projected. Today there are least hints of expenses. Republic Media outlet AZCentral.com reported a year and a half ago (May 22, 2012):

The cold-case posse has spent about $40,000 on the investigation so far, according to the Sheriff’s Office.3

That might include the cost of sending a deputy with Mike Zullo to Hawaii, but not Zullo’s several lobbying trips this past year nor his three-week adventure “out west” this past month. It wouldn’t have included fees paid to Reed Hayes. The number, whatever it is, must be significantly larger today.

Things have materially changed since the Cold Case Posse’s charge to assist the Maricopa County Sheriff’s office on unsolved homicides with volunteers who pay their own way. Now it’s an expensive donation-driven investigation of President Obama’s identity documents, which is neither a homicide, nor any case in Maricopa County.

I wonder if the IRS would classify today’s Cold Case Posse the same way it did in 2007? I hope not.

Related article:


1Some other Maricopa County Sheriff’s Posses do file IRS Form 990.

I use the word “hypothetically” because of the odd language in the narrative:

Chapter 501 (C)(3) states that an organization may request an exemption from federal income tax if it is organized as a separate entity of the governmental unit that created it.

The statement is true, but it says nothing about the Maricopa County Sheriff’s Cold Case Posse, Inc., although the careless reader might get that impression. The Cold Case Posse was chartered by the Sheriff’s Office, but they didn’t create the corporation that was seeking tax exemption. It was created by private citizens, and no one in their official capacity with the Sheriff’s Office signed the Articles of Incorporation.

2There are a few other curious things on the CCP Form 1023 Application. For example, Box XI (2) should have been checked, but it wasn’t.

3The Sheriff’s Office wrote to me that they had no financial records on the Cold Case Posse, who operate independently. That seems at odds with the Office being able to provide expense information to the Arizona Republic.

Cold Case Posse referred to IRS for failure to file Form 990

Most of the detail has already been presented in my article, “Is the Cold Case Posse a Charity?” The Maricopa County Sheriffs Cold Case Posse, Inc. (MCSOCCP) is designated a 501(c)(3) exempt organization (a charity that doesn’t pay taxes and who can accept tax-deductible contributions). Generally such organizations are required to file reports of their expenditures with the IRS on Form 990.

There is a reporting exemption for organizations that are “affiliates of governmental units” under the presumption that the governmental unit keeps tabs on their financial activities, and GuideStar (a source of information on non-profits) says that the MCSOCCP claims such an exemption; however, the MCSOCCP does not qualify for the exemption based on IRS criteria unless the Maricopa County Sheriff’s Office provides financial management or financial oversight of the Posse. The missing piece of evidence of illegal activity (failure to file Form 990) that I alluded to in a comment yesterday is a letter from the Maricopa County Sheriff’s Office indicating that there is no financial management or oversight by the Sheriff’s Office of its Cold Case Posse. Here’s the letter:

I filed a referral with the IRS this morning. By law, the IRS cannot provide any status information about such referrals beyond acknowledgment of receipt. The Cold Case Posse is also “not in good standing” with the State of Arizona for failure to file a report due last June (not a financial report).

The problem here, and the reason that I filed the referral, is that the Cold Case Posse, while claiming a government tax exemption, does not report its expenditures as required by law: It doesn’t report them to the Sheriff’s Office, it doesn’t report them to the Arizona Secretary of State, and it doesn’t report them to the IRS.

Update:

I looked on an additional web site, 501c3lookup.org, and the way I interpret that information, it appears that the IRS considers the Cold Case Posse an instrumentality of a state or political subdivision. (The material I presented to the IRS would demonstrate that this classification is not applicable to the Cold Case Posse.)

When applying to the IRS, one of the questions on the application for exemption form (Form 1023) is: Are you affiliated with a governmental unit? Besides an indication that an explanation should be provided for a “Yes” answer, there aren’t any specific questions for determining whether or not the applicant qualifies as a governmental unit. If the MCSOCCP has indeed a determination from the IRS that it is a governmental unit, and the IRS did its job correctly, and I correctly understand the criteria, one would conclude that the MCSOCCP misrepresented itself to the IRS or that it operates in a materially different way from when it was chartered.

By law an exempt organization is required to provide a copy of Form 1023 upon request and I requested this from the Cold Case Posse in a letter sent by certified mail, but of course the Cold Case Posse doesn’t claim its certified mail.