Theft, Disqualified Persons, and Excess Benefits
When practitioners think about Disqualified Persons and Excess Benefits we often think in terms of Officers, Directors, Key Personnel, and Major Donors. The Tax Court ruling in Vincent Fumo vs. Commissioner reminds us that you don't need to have a title, get paid, or donate a dime to be considered a Disqualified Person... It is the ability to exercise control, not the title that counts. It is sufficient to exercise control over the people who hold the titles.
So, by the way, what Excess Benefit did Fumo receive??? How about - he stole or misappropriated a bit over $1.1 million dollars from the charity.
The case is definitely an illustration of Marc Anthony's principle: "The evil that men do lives after them." (Shakespeare, Julius Caesar)
The embezzlements and misappropriations took place over periods extending back as far as 1991 - Fumo was indicted for them in 2007, and convicted in 2009. The tax consequences followed from the felony conviction (and are subject to no statute of limitations because of the size and nature of the nefarious activity).
To read the Court's decision: