Page 48 - AVN October 2015

LEGAL NEWS
STOP, THIEF | |By Nate Glass
FSC Petitions Attorney General for AHF Inquiry
At a press conference on September 2, Free Speech
Coalition Board Chair Jeffrey Douglas announced
that FSC had accumulated enough information by
using public filings and documentation from AIDS
Healthcare Foundation (AHF) itself to call into
question whether that organization had violated
its non-profit charter by engaging in political
activities in excess of the amount allowed under
both Internal Revenue Service regulations and the
regulations of the California Attorney General’s
Charitable Trust Section.
“While AHF has waged its latest political
campaign, an initiative for the 2016 ballot, there
has been a recurring question: how can a non-
profit entity spend so much money on political
activities without losing its non-profit, tax-exempt
status?” Douglas asked at the press conference.
“As you know, 501(c)3 organizations the size of
AHF are limited to spending $1 million a year on
political activities. Anything over this threshold
is subject to tax. If a 501(c)3 spends more than
$6 million over a four-year period on political
activities, the tax-exempt, non-profit status is
subject to revocation.”
Publicly available documents reveal that over the
past four years, AHF has spent at least $7 million
on political activities, and in at least two of those
years, the organization exceeded the $1 million
political spending cap—including 2015, which still
has roughly four more months to run.
“It also appears that AHF’s tax documents
under-report more than $1 million dollars to state
and federal authorities,” Douglas added. “According
to the documents we found, AHF has spent nearly
$7 million on political activities, which is above the
$6 million threshold that triggers the revocation of
non-profit, tax-exempt status.”
FSC also points out AHF is not above lying to
government agencies about political expenditures.
“In 2012, AHF reported to L.A. County $2.3
million in political expenditures in support
of Measure B,” FSC’s investigation revealed.
“However, AHF’s tax filings report only $1.6
million in total campaign expenses. That year AHF
also paid $100,000 to a lobbyist in Sacramento,
and $200,000 to a lobbyist in D.C. bringing their
annual total to $2.6 million; $1 million more
than they reported to the IRS and the California
At the press conference, Douglas handed out a three-
ring binder full of documents that FSC has examined
in coming to its conclusions. Those documents are also
available at FreeSpeechCoalition.com. Douglas also
supplied an analysis on the limitations on lobbying by
non-profits by attorney Jeffrey S. Tenenbaum.
The binder also contained a letter to Attorney General
Kamala Harris, titled “Request for Review.” that letter
stated, in part, “Our organization is concerned that this
entity’s [AHF] political activities have surpassed the
legal spending limits and is in violation of their non-
profit status. We have reviewed multiple newspaper
reports and publicly available documents that appear to
indicate that AHF has spent nearly $7 million over the
past 4 years on lobbying/political activities, in excess
of legal limits. Attached you will find a collection of the
publicly-available documents detailing these activities.
It is unclear whether there are additional lobbying/
political expenses. Please note that there also appears
to be multiple discrepancies between federal tax filings
and reported campaign expenditures; this may be an
indication of under-reported lobbying/political activity.
“We forward these documents to your attention
with the request that California’s experts and
regulatory authorities review and make an independent
determination on the legality of AHF’s political
spending and reporting,” the letter concludes. “This
request is based exclusively out of concern that all
taxpayers are harmed if a non-profit entity is allowed to
abuse its tax-exempt status.”
The letter and accompanying folder were delivered to
Attorney General Harris’s office. A copy was also sent to
the AIDS Healthcare Foundation Board of Directors.
When asked why FSC hadn’t also sent their
information on AHF to the Internal Revenue Service,
the federal entity in charge of organizations’ non-profit
status, Douglas replied, “At this time, we are reviewing
all options. We are starting with the California Attorney
General and will decide whether any other actions
are warranted. We feel it is best to have the proper
legal authorities review the documents and determine
whether they arrive at the same conclusion; that AHF
has underreported its political contributions and that it
has exceeded the four-year, $6 million limit.”
Keep up with news on the story by following FSC on
Twitter: @FSCArmy.
—Mark Kernes
Attorney General. AHF also reported $400,000 in
political expenditures in 2013. After reviewing the
public filings from that year, we found close to $800,000
expended. We can provide those documents as well.”
“Please note that we were unable to find
documentation on all of AHF’s political expenditures,”
Douglas added. “For example, we do not know the
amount AHF spent on its campaign for a City Public
Health Department, nor do we have any figures
from the state of Ohio where they have conducted a
substantial political campaign.”
Also not yet available are the amounts of AHF’s
contributions to its California political action committee
(PAC), Fair4CA.org, which was created by AHF
employees and served to push the California legislature
to enact AB 1576, which would have required condoms
and other barrier protections to be incorporated into all
sexually explicit content shot in California, as well as
other AHF political objectives. That bill failed.
“All of the contributions by AHF to Fair4CA are
attributable to AHF as a political expenditure, and I
think the case could be made that any contributions
to Fair4CA would count towards AHF’s total political
expenditures,” Douglas added.
“For those of you who have repeatedly asked how
AHF can continue to spend millions on its political
activities while retaining its tax exempt status, we
believe these documents give a preliminary answer:
They under-report to avoid the revocation threshold,”
he concluded.
Douglas noted that the reason for the press
conference was that “in recent weeks AHF has spent $2
million dollars on pending ballot initiatives for 2016,
and the fight over Measure B has heated up. As a result,
we have received numerous inquiries about AHF’s
political spending. To satisfy our curiosity we decided
to review the available public documents. We simply
wanted to answer the lingering question about their
political activities. Their harassment of our industry
is what motivated us to find out how much they have
spent on their obsession with the adult film industry.”
Continued from previous page
one feature series airing at any given time—both on Girlsway.com and on DVD.
Following the release of the six-part The Turning, the company will debut Sharing the
Bed, another pilot scene that was so well received by fans it’s also being expanded
into a multi-episode series.
“I am in the midst of pre-production and script writing for the next feature, as
well, which will be a psychosexual lesbian thriller,” Mills said. “And Alan and I are
already bouncing around a bunch of other crazy ideas for 2016.”
Girlsway also plan to celebrate its success with fans at the 2016 AVN Adult
Entertainment Expo by having its stars conduct in-character autograph sessions.
“As we approach our first anniversary, I’ve found myself reflecting a lot lately on
what a wild and crazy year it has been,” Mills said. “The success of the Girlsway
48 | AVN.com | 10.15
imprint is something that has far exceeded Gamma Films’ expectations, especially
considering it began as a personal dream project. We wanted to test a bunch of
different styles of shooting and storytelling and work very closely with models and
fans to adapt and evolve our brand together.
“I am very happy to say that, one year later, we’ve done just that,” she
continued. “Girlsway has evolved tremendously from what it was last October
and that is the result of constantly listening to feedback and fine-tuning our
production to reflect what our fans are looking for. We have totally broken down
the concept of standalone web content and are now producing lesbian erotica and
features in the same way that television channels produce shows. It’s not just
about our fans getting off ... it’s about getting off and being equally excited for
next week’s episode because the stories and characters are so compelling.”