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  •   ethics watch  

    Summerhill non-profit sues founder after IRS audit

     

    By JIM WALLS

    Sept. 6, 2010 — Infighting and tax troubles are threatening the future of a citizens’ group founded to improve the Summerhill community near Turner Field.

    Non-profits everywhere are having a tough time making ends meet. But this ruckus also involves allegations of fraud and raises questions about oversight of $1.6 million in Braves parking fees that have been redirected to the neighborhood since 1997.

    The Summerhill Neighborhood Development Corp. sued its founder, former state Rep. Douglas Dean, in May, alleging he secretly pledged the nonprofit’s property to back $2.4 million in bank loans — now in default — to benefit a private developer.

    The non-profit, according to the suit, “now faces the very real possibility of losing substantially all of its real property assets.” It asks that a judge declare the real estate to be Summerhill’s, free and clear of any other claim, plus punitive damages from Dean and other defendants.

    In addition, federal tax records list $470,000 in unsecured, interest-free loans from the non-profit to Dean and his wife, and $50,000 to the group’s new CEO. Summerhill reported the loans as “excess benefit transactions,” a term the IRS uses when a tax-exempt filer has paid someone more than it should. A non-profit must pay income tax on the money unless it can recover the loss.

    Summerhill already had a problem with its property taxes, which Fulton County says have not been paid for three years. The total bill is nearly $56,000.

    Dean denied wrongdoing in a telephone interview. The “loans,” he said, were actually reimbursements for money that Summerhill had borrowed from him over a number of years.

    But he acknowledged that IRS auditors, who looked at the books back through 2003, questioned those debts when they could find little or no documentation.

    “The debate is this: If you loan somebody some money, it should have been in a loan document,” Dean said. “Well, we didn’t operate that way.”

    Dean, who took a leave of absence in February, said he had no idea of the total amount of reimbursements to himself and his wife. He said he hopes Summerhill’s part-time accountant can come up with receipts and other documents to support the reimbursements.

    Summerhill was one of three neighborhoods that signed off on building the Olympic stadium, now known as Turner Field, in 1993. In return, the Atlanta Braves promised to put money back into the community to mitigate the effect of traffic, crowds and noise.

    Under the arrangement, the Braves dedicate about 8 percent of parking revenue to three neighborhood groups. But the money first passes through the Atlanta-Fulton County Recreation Authority and then the SMP Community Fund, a non-profit whose board is appointed by the authority.

    These are not exactly arms-length transactions. Dean serves on the recreation authority and votes on each appointment to the community fund’s board. Mattie Jackson, who sits on the Summerhill non-profit’s board, is also on the fund’s board, as are two members of the recreation authority.

    Dean’s appointment, incidentally, expired in 2001 but he’s still serving because no one was ever named to replace him. He doesn’t see any conflict with his multiple roles.

    “Me being on the recreation authority has benefited Summerhill,” he said. “I’ve represented Summerhill well. I’ve protected their interests.”

    The Summerhill board, in tax filings, said it didn’t approve the “excess” payments to Dean and the others. Similarly, the lawsuit alleges Dean traded on a “special relationship of trust” when he pledged the non-profit’s property to back the developer’s debts without the board’s knowledge.

    Summerhill’s income derives primarily from the Braves, but it’s channeled through the recreation authority and a non-profit board under its control.

    So who was supposed to make sure Summerhill spent the money responsibly?

    Not the authority, said its chairman, Fulton County Commissioner Nancy Boxill. The deal for the Olympic stadium, she said, gave the neighborhood groups virtual autonomy in spending decisions.

    If in charting their own destiny they have taken some actions … that neither you nor I would support, it doesn’t matter,” Boxill said. “Because the design was for the neighborhood to be in control of that.”

     

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    8 Responses to “Summerhill non-profit sues founder after IRS audit”

    1. Wendy Battaglia says:

      Glad to see that the miss use of these SMP funds is finally being investigated,
      Keep digging!

      Thank you

    2. George Vetrano says:

      I knew it seemed odd that weren’t even able to execute on buying sign-toppers to represent our community. Designs for Summerhill sign-toppers were completed almost 5 years ago and to this day, no signs. Makes sense now, since the money was being filtered elsewhere. It is time to straighten this mis-management out, clean-up the books, and let the Stadium neighborhoods reach their full potential.

    3. Mechanicsville Resident says:

      I’m glad to see that Summer Hill has been making strides with their struggle against the fraudulent use of funds in their community. I hope that Mechanicsville and Peoplestown aren’t far behind with battling the corruption and mismanagement with those same SMP funds.

    4. Summerhill Resident says:

      I lived in Summerhill for over 10 years and to this date there is still no accountability for how SMP Community Funds are spent. With the braves distributing over $750,000.00 a year to Summerhill, Peoplestown, and Mechanicsville you would think we would see full disclosure. What else are they hidding? Braves management doesn’t even seem to be concerned about the best interest of our community. What a Joke!

    5. SMP Greed says:

      The SMP funds were created by the Atlanta Fulton County Recreation Authority (AFCRA) to pay off the long standing black leadership in central Atlanta for the right to build and destroy whatever history was there prior to the Olympics. AFCRA and Nancy Boxill have long given this blood money given to public officials as a payoff (Janis Ware at Summech, Douglas Dean in Summerhill and Columbus Ward in Peoplestown).

      AFCRA is also responsible for land acquisition and banking which has kept the Stadium Neighborhoods blighted at the urging of the Atlanta Braves and Turner Field. Keeping this land blighted allows the Braves and Turner Field to keep every penny inside that the ballpark and keep taxes low. How often do you see the Braves and Turner Field involved in the community? NEVER!

      Much of the AFCRA land is also unkept. There’s a lot at 776-778 Formwalt in the middle of Mechanicsville with 6 foot high weeds that is owned by AFCRA and held by Marathon Investment Corporation. The blighted lots that surround the stadium are owned primarily by AFCRA and John Elder.

      It’s clear as day that the money is a payoff by the Braves and Turner Field through AFCRA to the communities in the best interest of Fulton county because it’s about tax revenue!!!! And the leadership in Atlanta/Fulton knows all to well about this but will not become involved because it crosses political/racial lines.

    6. Still unanswered questions says:

      Great article, but it still leaves a couple of questions unanswered. How can a $50,000.00 loan to the current CEO of the SNDC be justified?? If the SNDC sued Doug Dean, he can just file for bankruptcy; the SNDC continues to receive the money from Nancy Boxill and nothing changes. You better believe the SNDC saw this day coming months ago and their lawyer figured this was the best way to save the SNDC. Dean takes the fall; nothing else changes.

    7. SMP Greed says:

      @ Still Unaswered

      That’s why it’s integral to show the dispersal of the SMP funds to the 3 stadium communities is part of a larger scheme involving the Summech (Mechanicsville) who uses the MCA as a front, the SNDC (Summerhill) and PNDC (Peoplestown). Atlanta Braves and AFCRA. There fall guys like Douglas Dean and Sharon Collins are small fry compared to the connected Nancy Boxill, Janis Ware and Shirley Franklin.

      Don’t you think it odd that AFCRA is located within Turner Field? http://www.afcra.com/about.php

      Don’t you think it odd that Douglas Dean’s appointment to the board expired in 2001 and he remained on the board?

      Don’t you think it odd that Janis Ware who runs Summech was also on the board of the AHA? http://www.atlantaprogressivenews.com/news/0306.html

      Don’t you think it odd that several organizations met with AFCRA to discuss their corrupt business practices and they appointed Dwanda Farmer as an advisor to replace Sharon Collins when she works and has worked for Summech? Both of whom are also on Summech’s board.

      Don’t you think it odd that the MCA presided by Sharon Collins didn’t pay taxes on their property either?

      Don’t you think it odd that many of these people at “Non-Profits” are involved in city government and pushing for the creation of a land bank?

      What I don’t understand is how so few are controlling so many whom they are trying to help.

    8. TIRED says:

      I DON’T UNDERSTAND HOW PEOPLE THAT CLAIM THEY WANT A BETTER NEIGHBORHOOD STAND BY FOR YEARS AND WATCH OTHER SURROUNDING NEIGHBORHOODS WITH LESS RESOURCES AND FEWER YEARS PASS SUMMERHILL UP IN PROGRESS, GEORGIA AVE IS LOST IN TIME, THE MONEY THAT WAS FOR THE COMMUNITY IS GONE AND NOTHING TO SHOW FOR IT, THE OWNERS OF THE BUSINESS DISTRICT ON GEORGIA AVE, THE BOARD MEMBERS AND CITY LEADERS THAT DONT LIVE IN THE COMMUNITY HAVE NO REAL INVESTMENT SO THEY DONT CARE. TIME FOR CHANGE IS NOW

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