Editorial: IRS Must End Jester Tax Fraud
Sat Jan 28, 2012
By Sandy Frost
For those of you who might not know, I have been investigating a Masonic sub-group the past three years with members caught by the FBI in a human trafficking sting. Those caught include a NY state Supreme, his law clerk, a retired sheriff and a retired police captain.
This nonprofit group, the Royal Order of Jesters, is a subsidiary of the Shriners. You know the Shriners; those grandfatherly types who wear red fezzes and drive goofy cars in parades.
One must first be a Master Mason before joining groups like the Scottish Rite, the Knights Templar and the Shriners. One must be a secretly invited Shriner to be a Jester.
Let me make it clear that I support those good hearted Shriners who dedicate their retirement years to supporting their hospitals, though they now take insurance. It was, in fact, a Shriner whistleblower who contacted me six years ago and asked me to investigate his own after he and a former IRS agent identified “irregular” tax returns.
I do not support those Shriner leaders who viciously retaliate against those who question them in ways that would make Machiavelli blush.
I do not support those Shriner leaders who abuse their positions of public trust for personal gain.
Case in point?
The former chairman of the board of trustees fired the executive director of development for not going along with rehiring a fundraiser who raised $46.2 million but only gave $2.5 million to the Shriner hospitals. This same former chairman is listed on this Jester flyer as the “Director of the Book of the Play” and was featured in this New York Times article “Report on Shriners Raises Questions of Wrongdoing” by Stephanie Strom.
I do not support using elders of our great nation, including retired military and distinguished business and community leaders, as a front for those pulling the strings to make a buck off a failed skin substitute developed at a Shriner hospital using 150 little burned kids in a study so flawed the FDA shut it down.
I have been investigating the Jesters the past three years as well as the former fishing tour operator who took 19 of them fishing in Brazil for girls over 13. The tour guy is now under grand jury criminal investigation out of Miami for child sex tourism and is being prosecuted by Brazilian authorities for luring underage Brazilian Indian girls into prostitution for his North American fishing clients.
These same 19 Jesters were called as witnesses in a related court case about their first hand knowledge of sex with minors and drug use while fishing in Brazil.
The Brazilian Senate is investigating this and 20 of tour guy’s clients. There is a strong possibility that these clients are those same Jesters who went fishing in Brazil.
The Jesters recently suffered a very public defeat and now must pay property taxes on their new million dollar HQ in Indianapolis, Indiana. Details will be available after the Indiana tax review board publishes their findings.
I published the first ever article about the Jesters three years ago and focused on the Jesters’ property tax exemption application and subsequent denial by the Marion County assessor. I’ve wondered if any Masonic influence would be exerted in favor of the Jesters since they are famous for having members in high places.
Governor Rick Scott of Florida recently appointed a judge to the fourth circuit out of Jacksonville who is, or was, a Jester. The judge’s application shows he reported his Masonic, Shrine, Scottish Rite and York Rite memberships but not his Jester membership. Another Florida judge is or was a Jester and is related to the previous publisher of their newsletter, presumably sent to the newly appointed judge’s email address. The problem is that it’s his official city of Jacksonville email address. I Googled the newly appointed judge’s email address and found him listed on two Jester membership lists posted online.
These judges are members of a tax exempt secret society described in court documents as a nationwide network of human trafficking and prostitution with guys in most of the 191 “courts” who get the girls to their weekend sex parties.
This flyer shows that not only are the Jesters still throwing their parties, this names one of the Jesters who went fishing in Brazil. He’s also prominent in the northern Florida planning community and even has an award named after him.
Florida Jester activity includes:
Two Jester judges out of Jacksonville
Select & book individual girls
Like I’ve written before, who cares if these guys party with prostitutes, get snot slinging drunk or gamble their asses off? That’s just a weekend in Vegas.
The outrage is that the Jesters don’t just screw the prostitutes; they screw all of us tax payers because we subsidize and make up for the taxes they don’t pay. The Jesters deduct the costs of things like transportation, regalia and rituals as well as expenses for their weekend parties. According to this tax return, the Jesters deducted nearly $600,000 for one of their weekend parties.
$12K a minute?
One of the national directors listed on the above tax return as “Royal Property Man” is on the Jester witness list. The judge caught in the FBI human trafficking sting testified that he worked with national Jester officers, presumably operating out of their Indianapolis HQ building, to get prostitutes to a national Jester convention in Niagara Falls, Ontario, Canada.
The property tax debacle began after a handful of Jesters formed a “charity” and filed papers with the Texas Secretary of State to qualify their new HQ as a museum. The Texas filings were then transferred to Indiana, then submitted to the IRS, who then granted the Jesters nonprofit status as a 501c3 charity.
Things began unraveling after Marion County inspectors found the Jesters HQ was not a museum and, in fact, that their executive director was using office spaces for his law practice. The Jesters appealed, arguing that they deserved the property tax exemption because they are part of Freemasonry.
The Indiana tax review board denied this argument, the reasons for which will be reported as soon as their findings are made public. These decisions now give the state of Texas and the IRS cause to investigate the Jesters for submitting fraudulent applications since Indiana failed to recognize their HQ as a museum and denied their fraternal claims.
Documents like IRS 1023 application for tax exemption and the last three years of a nonprofit group’s tax returns are, by law, to be disclosed w/in 30 days of a request. A first request for the Jesters 1023 was sent on December 20, 2007 and two times since. They have not complied with IRS disclosure laws and, at the rate of $20 a day, could be fined nearly $30K.
If you or I were fined for half that, we’d be getting letters of lien and asset seizure.
To summarize, the Jesters claimed they deserved a property tax exemption after convincing the Texas Secretary of State and the IRS that their new HQ was a museum. The Marion County assessor found the building was not a museum and denied their application. The Jesters then appealed, claiming that Masonic affiliation qualified their HQ for property tax exemption. The state of Indiana then denied the Jesters appeal.
I asked the following question in my first article three years ago:
“Have the Jesters hustled the feds by convincing them that raising millions for partying is a legitimate exempt purpose because the IRS has had no problem classifying them as both a nonprofit fraternity and charity?”
Now that the Jesters’ little scheme has blown up in their faces, how long will it be before the IRS finds out that the state of Indiana has rejected the very arguments they made to the tax agency in the first place?
If the IRS identified two counts of tax fraud at $250,000 for a total of $500,000 against each 191 Jester courts, the agency could realize nearly a billion dollars in fines. Seizing Jester court assets, as reported on their tax returns, could add another $10 million.
Other agencies investigating the Jesters include ICE, the FBI, the DOJ and Homeland Security.
Once the IRS uses Indiana’s denials to launch a fraud investigation, how long would it take to jerk their nonprofit status?
And how long would it take the other agencies to identify enough predicate acts to launch a RICO investigation of the Jesters?
The maximum sentence for racketeering is 20 years in prison and a $250,000 fine. Multiply that by 23,000 Jesters who facilitated or knew of or participated in the human trafficking and the feds could collect a combined fine of $5.750 billion dollars.
“HUMAN TRAFFICKING AND RICO: A NEW PROSECUTORIAL HAMMER IN THE WAR ON MODERN DAY SLAVERY” by Kendal Nichole Smith was published in the George Mason Law Review and states “The parallels between the human-trafficking problem and other forms of organized crime suggest that prosecutors should utilize the Racketeer Influenced and Corrupt Organizations Act (“RICO”) intended specifically to eliminate organized crime in conjunction with the Trafficking Victims Protection Act (TVPA) to more successfully eradicate these human-trafficking enterprises.”
Four Brazilian women sued the former tour guy in the first ever complaint based on the TVPA. This case was stayed after the defendant reported he was under grand jury investigation in Miami and was being prosecuted by Brazilian authorities. Media around the world, including the New York Times, Bloomberg and Huffington Post, reported this and their coverage helped launch the Brazilian Senate’s investigation.
So, how can we stop the greatest nonprofit fraud of our time; human trafficking and prostitution at tax payer expense?
Aside from the IRS suspending the Jesters’ tax exempt status, it’s time for the Senate Finance Committee to launch hearings. Members and/or staff have known about the Jesters for years. Hearings need to expand beyond the Jesters and question why secret societies should be tax exempt.
The Masons, in spite of all their lofty proclamations and all the good that they do, have failed to police their own. It appears that they protect their brothers at any cost because the Grand Masters of the Grand Lodges of the United States have yet to declare the Jesters “clandestine” or do anything to clean up the sex crimes.
How can the Shriners distance or disassociate themselves from the Jesters when the former chairman of the board of trustees and former CEO/President is listed on event flyers as directing “The Book of the Play”?
“The Shriners and Management by Mirth” reports “Eleven out of twelve of SHC trustees are Jesters. Fourteen out of twenty one of those listed on the SHC 2006 tax returns are Jesters. Nine out of fourteen of those listed on the 2006 fraternal tax return are Jesters.”
The article continues “The corporate model of ‘Management by Mirth’ could prove fatal because it's based on undisclosed conflicts of interest. It's based on deception because the Shriners have hidden their affiliation with the Royal Order of Jesters from the IRS by not listing them as an affiliated group on their tax returns. Considering both groups' scandals, could there be a common mindset here, common to these Shriner and Jester ethical lapses? Maybe its how certain leaders act, as if they are above the law? Shriner by-laws state that ‘Shrine law does not include the law of the land.’ These investigations are calibrating the tipping point between the public benefit provided and the public burden of us paying for these expensive, extensive investigations. Though ‘Management by Mirth’ may seriously sidetrack the Shriners from their exempt purpose, oversight by law enforcement is no way to run a nonprofit group.”