A complaint filed to the IRS, alleges that conservative activists Catherine Engelbrecht and Gregg Phillips used funds from the nonprofit True the Vote for their personal gain.
The nonprofit watchdog group Campaign for Accountability called for an investigation into True the Vote, which has repeatedly made false claims about voter fraud in elections.
The complaint alleges that True the Vote may be in violation of state and federal law when the charity used donations to issue loans to Engelbrecht, its founder and profitable contracts to Phillips, a longtime director.
In addition to that, the complaint also states that the organization failed to disclose payments to insiders in its tax returns, which included extravagant legal bills paid to their general counsel at the time, who had filed election-related lawsuits in four states.
“Such disclosure lapses heighten suspicion regarding whether True the Vote and or its current or former officers and directors intended to conceal the payments from the public or IRS,” the complaint said. The self-dealing contracts and loans were first reported by Reveal.
After getting involved in Tea Party activism in the Houston area, Engelbrecht started True the Vote, a Texas-based organization. During their fundraising campaigns, Engelbrecht and Phillips have promoted probes into voter fraud but have failed to provide any evidence of such activity for years.
The pair gained national attention when Dinesh D’Souza a conservative filmmaker, featured the nonprofit’s discredited work in the film “2,000 Mules,” which played in theaters across the country.
In the past, Engelbrecht and Phillips defended their voting work and their lawyers have previously stated that there was nothing wrong about the loans and contracts. According to ProPublica, neither Engelbrecht and Phillips nor their lawyers responded to requests for a comment.
Federal law allows nonprofit organizations to operate tax-free, however, in return, they are required to disclose significant financial information to make sure that donor funds are being used appropriately. Charities like True the Vote are also not allowed to engage in certain political activities.
“I hope that the IRS and other applicable authorities take seriously what appears to be a pattern of bad behavior by Catherine Engelbrecht and Gregg Phillips, and that makes the pursuit of accountability that much more important,” said Michelle Kuppersmith, executive director of Campaign for Accountability to ProPublica.
In 2020, the organization filed a separate complaint about True the Vote engaging in political activity with Georgia’s Republican Party. The IRS did not respond to that complaint.
Legal issues have accumulated since D’Souza’s movie was released.
In a pending case, a Georgia voter sued the pair and D’Souza for defamation because he was wrongfully accused of committing voter fraud. The state’s investigation found that the voter was dropping off ballots for himself and family members, which is legal.
After Engelbrecht and Phillips were not able to provide evidence of voter fraud to investigators in 2020, former Arizona Attorney General Mark Brnovich’s office asked federal authorities to investigate True the Vote’s finances.
Their former general counsel, James Bopp Jr., is now suing True the Vote in federal court for a breach of contract for nearly $1 million in unpaid legal bills dating back several years, according to court records obtained by ProPublica.
The organization has countersued Bopp’s law firm and denies unpaid invoices and accuses it of engaging in fraud and substandard lawyering, according to the records.
True the Vote’s counterclaim has no merits, Bopp said in an interview with ProPublica.
“We were shocked they responded this way. They did nothing but praise our work,” he said. “This is what unscrupulous people will do when they try to avoid the repayment of debt.”
In January, ProPublica and The Dallas Morning News reported that the pair had created another charity, the Freedom Hospital. It was intended to help children and elderly people affected by the war in Ukraine with medical care. It raised halfway to $25 million for a mobile hospital, according to its website which has been taken down. According to ProPublica and the News investigation, the efforts never materialized.
The pair’s attorneys stated that it was a good-faith effort and that his clients had only raised $268 for the project through PayPal. The lawyers said that the donations were returned “at Mr. Phillips’ direction.”
According to their 2021 (and most recently filed) tax return, True the Vote raised about $1.7 million but fell $289,157 into the red. This return no longer includes Phillips as a director. In 2020, the organization raised $5 million.
The organization had given a reporter and the IRS two widely different tax returns in 2019, these returns were filled with inconsistencies over key questions about governance and Engelbrecht’s $113,000 loan.
True the Vote said that it had planned to file an amended return, however, it does not appear to have been filed with the IRS.
Texas law states that directors of nonprofits can’t receive loans from their own organizations. Despite this, Engelbrecht, who was director and an employee at the same time, regularly received loans from the nonprofit.
The loans ranged from about $40,000 to $113,000, according to tax fillings. In addition to also earning a salary.
Phillips, who first joined True the Vote as a board member in 2014, received at least $750,000 related to a research analysis contract. The Campaign for Accountability, in its complaint, raised questions regarding the funds and what, if any, services were actually provided.
According to court records, Bopp was paid approximately $280,000 over a seven-day period, related to filing and supervising attorneys on election-related lawsuits to challenge the results in key states. Although originally there were seven lawsuits to be filed, Bopp only filed four and quickly withdrew them. Bopp justified the costs to file the complaints as legitimate as each state had different laws.
“Such legal fees seem excessive for a few days of work in lawsuits that never proceeded past an initial complaint and which The Bopp Law Firm voluntarily dismissed shortly after filing,” the complaint said.
In 2020, True the Vote failed to report those contracts in its tax returns, which are required for contracts above $100,000. “Ms. Engelbrecht, as President of True the Vote, appears to have voluntarily and intentionally filed a false, incorrect, and incomplete Form 990,” the complaint said.