TLR has learned that a complaint for alleged noncompliance with U.S. tax laws has been lodged with the Internal Revenue Service regarding non-profit entities California Consumer Protection Foundation (“CCPF”) and Consumers for Auto Reliability and Safety (“CARS”).

    According to sources familiar with the situation, alleged inconsistencies in IRS 990 forms submitted to the IRS by those two entities, as well as allegedly misleading statements made by CCPF on its website, prompted the complaint.

    CARS is a non-profit entity located in Sacramento, California. It was established and is headed by Rosemary Shahan.

    Shahan, who as an irate consumer picketed a car dealership for over a month with an illegible sign, has established herself as an advocate in areas concerning automobiles, pressing manufacturers to build safer and more reliable cars, lobbying legislators to pass laws in support of such matters, and exposing schemes and fraudulent conduct by car dealerships.

    In addition to heading her own non-profit entity (CARS), Shahan also serves as an “adviser” to CCPF alongside others, including Michael Shames and Stewart Kwoh. See http://consumerfdn.org/advisors.php. (See also here.)

    CCPF is an entity headed by Judy Johnson, who until recently served as the Executive Director of the State Bar of California.

    In 2010, Johnson left the State Bar of California in disgrace after a prolonged embezzlement of close to $800,000 by another employee was discovered, and after California Governor Arnold Schwarzenegger vetoed State Bar-related legislation as a result.

    According to these sources, CCPF professes and declares that it lists on its website all the grants it has issued and all the corresponding grantees going back to 2001. When visiting CCPF’s website, one is given the option to search by year or the name of the grantee. A search for grants funneled to CARS yields only 2 results – a grant in 2006 in the amount of $60,000, and another in 2009 in the amount of $7,400.

    One can also visit http://consumerfdn.org/granteesList.php for a list of all the grantees. (See also here.)

    Each of the above search options yields the same result – to wit, only 2 grants are listed that were made to CARS.
    Unfortunately, however, this allegedly is not the case, as CCPF’s own tax returns provide otherwise. For example, page 28 of CCPF’s IRS Form 990 for 2004 lists a $60,000 grant.

    This misrepresentation is allegedly the fruit of an unlawful conspiracy between Judy Johnson and Rosemary Shahan, and is very troubling on its face. This is particularly true given that Ms. Shahan, who serves as an adviser to CCPF, and presumably is familiar with the content of the website, should have alerted CCPF that the information presented is inaccurate and false, by omission and otherwise.

    In addition, sources allege that various inconsistencies were discovered in connection with two types of grants from CCPF to CARS: the first is the Consumer Auto Advertising Fund (“CAAF”) grant and the second is the Bank of America (“BA1”) grant.

    In 2004, CARS reported to the IRS revenues from all sources in the amount of $91,009. (See page 28 of CARS 2004 IRS 990 return.) By comparison, CCPF reported that it had funneled to CARS $60,000 from the CAAF grant, and $61,215 from the BA1 grant.

    Also in 2004, CCPF reported a leftover “payable” of $61,212 from the BA1 grant which it holds in reserve for future payment to CARS.

    In 2005, CARS reported to the IRS revenues from ALL SOURCES in the amount of only $58,212. (See CARS 2005 IRS 990 returns.)

    By comparison, in 2005 CCPF reported funneling $60,000 to CARS out of the CAAF grant. This, according to the sources, already raises a red flag as it shows that CARS under-reported its revenues for 2005 by the difference of $1,788. (See here on page 22.)

    Most importantly, however, in 2005 CCPF also reported an additional $48,970 distributed to CARS from the BA1 fund, leaving only $12,242 in reserve as “payable.” (See entry on page 22.)

    Unfortunately, the sources maintain, no corresponding reference to the $48,970 was found on CARS’ 2005 tax returns.

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