Investigation: All Aboard Florida opponents collect millions, but where did the money go?
Posted on July 3, 2016
By Lisa Broadt of TCPalm
Correction: This article has been modified from its original version to correct the spelling of Daniel Borochoff's name.
All Aboard Florida opponents over the last two years have donated millions of dollars to activist groups that say they are dedicated to fighting the Miami-to-Orlando passenger railroad.
But it's unclear exactly how opposition groups — including Citizens Against the Train, Citizens Against Rail Expansion in Florida and Florida Not All Aboard — have spent that money, an investigation by Treasure Coast Newspapers found.
None of those groups is a registered, tax-exempt organization. In fact, all three have organizational structures that require little legal accountability, the investigation found.
As limited-liability corporations, Palm City-based Florida Not All Aboard and Hobe Sound-based CARE have wide leeway in how they spend donations; money given to these organizations is not tax deductible and the organizations do not have to make Internal Revenue Service filings public, as do registered nonprofits, according to the IRS.
CARE, a coalition of homeowners associations in Palm Beach and Martin counties, began soliciting donations in 2014 and last year filed federal legal action against the $3.1 billion railroad.
But CARE's steering committee — which describes its core values as "honesty, transparency and community" — refused Treasure Coast Newspapers' request for information about how it spent more than $1.4 million in donations or how it plans to raise and spend the additional $1 million it says is needed to continue its fight against All Aboard Florida.
"As a private entity, CARE FL is only required to file lobbying and campaign expenditures, which are public records," said a statement from CARE, an organization comprised of homeowners associations in northern Palm Beach and Martin counties. "AAF has never made public what it spends on legal fees, public relations or its grass roots effort. All that we know is that (their costs) are exponentially greater than ours. We will agree to publicly share our numbers when they share their numbers."
Citizens Against the Train Fund, meanwhile, describes itself as a tax-exempt, 501(c)(3) organization, and says all donations will "support efforts to stop the All Aboard Florida high-speed rail service from barreling through urban residential and commercial centers along the East Coast of Florida."
The problem: Citizens is not a 501(c)(3), Treasure Coast Newspapers found.
Rather, Citizens is a fictitious name of the tax-exempt Guardians of Martin County, a nonprofit organization whose mission statement is to maintain "the environmental integrity of Martin County's urban boundary."
Neither the name "Citizens Against the Train" nor the anti-All Aboard Florida activities described on its website are included on the Guardians' tax filing, as required by law.
In its review of its activities in 2014 — the year "Citizens" was filed with the state as a fictitious name — the Guardians reported to the Internal Revenue Service it had seen no significant changes in activities.
Grants and donations to the Guardians nearly doubled from $200,000 in 2013 to nearly $400,000 in 2014, according to the organization's 2014 tax return, the most recent information available. Guardians did not return calls seeking access to its 2015 tax return.
It's unclear how much of that money was intended for — or spent on — train-related efforts.
Guardians of Martin County President Peter Conze denied wrongdoing or procedural errors on the Guardians' tax forms, also denying Guardians made any mistake in omitting the "Citizens" name.
"It's a sub bank account," Conze said about Citizens Against the Train Fund. "What happens is someone says, 'I'd like my donation to be used'" for the train efforts, and "that's how we use the funds."
Still, disclosing fictitious names is "not optional," and omitting them can result in penalties, according to Michael Dobzinski, IRS media relations specialist.
Activities of Citizens Against the Train Fund, Conze argued, are safely within the Guardians' mission statement, and thus also tax-exempt.
"Because the Guardians of Martin County is tax exempt, that means we have to live within the mission statement we provided to the IRS. The specific mission we have is to educate the public about challenges to quality of life," Conze said. "The key thing is that we scrupulously live within the mission statement."
An online campaign against All Aboard Florida, including a video series on YouTube, comprised most of Citizens' related expenditures in 2014, according to Conze. Nevertheless, he declined to say how much was spent on the effort.
A nonprofit that uses multiple names — and does not clearly identify to donors the purposes of each name — can be a red flag, according to Daniel Borochoff, president of Charity Watch, a nonprofit watchdog organization.
At the very least, nonprofits risk their credibility when they're not clear about their various entities and how money is distributed, according to Borochoff.
"It's vital to earn the donor's trust for them to feel confident in supporting the organization. They need to be clear on the forms about what entities are receiving money," Borochoff said. "The risk is it all gets mixed."
"In giving to a for-profit there's less accountability and less assurance money will be used for the purpose intended. Maybe people know each other and are comfortable with the arrangement, but for other people it could seem to be riskier" to give to the charity, Borochoff said.
Rail-opposition efforts also have been supported by public dollars. Over the last two years, Martin and Indian River counties have allocated or spent more than $4 million fighting Brightline rail service.
All Aboard Florida is to begin Brightline rail service between Miami and West Palm Beach next year, with full service to Orlando in 2018.