Judges and the public should be skeptical of the growing number of fraud claims being made against nonprofits in political contexts. Given the sweep of these statutes, it’s all too easy for the government to exercise censorship by other means through fraud allegations. (12/12)
The AGs essentially claimed “false statements” were being used by Media Matters in the report to help their fundraising. A federal judge though found the report was protected speech under the First Amendment and stopped the state investigations. (11/12) deadline.com/wp-content/u...
A federal judge found as much in 2024. After the urging of Stephen Miller, the TX and MO AGs issued demands under their consumer anti-fraud statutes against Media Matters for their report that alleged advertisements were being placed on X next to antisemitic content. (10/12)
These types of sweeping fraud claims by the government allow for targeting organizations the government simply doesn’t like. This could be used as easily to target conservatives as liberals. It also raises clear constitutional issues. (9/12)
Or there was a case filed against ActBlue this week by the Texas AG under its consumer fraud statute. Essentially the AG claims that ActBlue misrepresented that they had strong systems in place to protect against foreign donations and didn’t. (8/12) www.texasattorneygeneral.gov/news/release...
As 23 Republican state AGs wrote in August 2025: “State consumer protection laws prohibit deceptive and misleading statements to market a product. ELI is representing its training as objective when reality shows that it is not.” (7/12) ago.wv.gov/media/37549/...
The subpoena is light on details, but the AG seems to argue that ELI’s training was pitched as “neutral” even though ELI (unsurprisingly) has connections to climate litigation. As such, judges – “consumers” – were being defrauded by this training that isn't "neutral". (6/12)
It’s already started at the state level. Last week, the Florida attorney general subpoenaed the Environmental Law Institute (ELI) over a judicial training program they run. The FL AG claimed it violated a state consumer protection anti-fraud law. (5/12) www.myfloridalegal.com/newsrelease/...
This type of fraud charge should concern everyone. The government is arguing that if a nonprofit states something that can be interpreted as a misrepresentation they can be targeted for fraud. This is a dangerous political weapon. (4/12)
DoJ claims this “misrepresentation” is the basis for its six wire fraud charges against SPLC - punishable by 20 years in jail each. To be clear, according to SPLC, paid informants helped save lives and was part of its work to dismantle these groups. (3/12)
Some background: SPLC’s website stated donations would be used to “dismantle” hate groups. SPLC had a program that paid informants at hate groups. DoJ claims this somehow shows donations were used not to dismantle, but support hate groups. (2/12) www.justice.gov/opa/pr/feder...
There has been rightful widespread condemnation of DOJ’s indictment of Southern Poverty Law Center yesterday. What’s been largely missed is that the fraud claim central to those charges can be politicized to target a sweeping range of nonprofits. In fact, it’s already begun. (1/12)
And, of course, this may foreshadow future efforts the administration could undertake to change the IRS's illegality doctrine: www.icnl.org/post/news/ev...
All nonprofits should be concerned. This type of politicization could frighten many Americans from entering the nonprofit sector if they aren't sure their loans will be repaid. A future administration could also broaden the list of activities that trigger this regulation. 9/9
In sum, nonprofits truly engaged in serious illegal activity can already have their exempt status revoked by the IRS. This regulation is different. It allows for potentially politicized use of the public service loan program against nonprofits working on certain issues. 8/9
To regain eligibility for the public loan forgiveness program, a nonprofit would have to wait 10 years or submit to a Department authorized "corrective action plan". 7/9
Further, to be eligible nonprofits have to certify they are in compliance with this regulation. This can potentially open them up to liability under the False Claims Act where 3rd parties can sue if a nonprofit "defrauded" the U.S. gov't. 6/9
It then allows the Education Dept. to unilaterally determine by a "preponderance of the evidence" whether a nonprofit has engaged in "activities that have a substantial illegal purpose". The regulation does not envision appeal to an independent court. 5/9
This proposal defines "substantial illegal purpose" to include only a set of crimes related to aiding and abetting violations of immigration law, anti-discrimination law (think universities), disorderly conduct (think protests), and other crimes this administration is focused on. 4/9
The Education Department claims the regulations are based on the IRS's "illegality doctrine", but the IRS already can revoke a nonprofit's status if it has an illegal purpose or engages in substantial illegal activities. Something else is going on here. 3/9 www.icnl.org/post/news/ev...
Under the regulations, a nonprofit that the Education Department unilaterally determines engages in “activities with a substantial illegal purpose” is ineligible for the public loan forgiveness program. 2/9
The administration proposed concerning new regulations today that would open up nonprofits to investigation, potential third party litigation, and even gov't imposed "corrective action plans" if their staff participate in public loan forgiveness 1/9 www.federalregister.gov/documents/20...
It's still early days, but I would expect that these laws will be challenged in court and so it will be important to watch what lines the courts draw for states in this space. 6/6
Nonprofits have had to recently deal with more aggressive enforcement of #FARA. These state laws complicate things further - potentially creating 50 different foreign influence schemes for nonprofits to navigate. 5/6 www.icnl.org/our-work/us-...
There are strong First Amendment and federal preemption arguments against these laws. They also have unintended consequences. In Nebraska, one has to register for setting up a talk for a Chinese dissident or the Chinese Communist party. The law makes no distinction. 4/6
It is unclear how these new laws will be enforced, but they are already causing headaches. If a nonprofit receives money from a US company with 25% Chinese ownership it is barred from fundraising in Florida. But nonprofits aren't well equipped to know how a company's ownership is structured. 3/6
At ICNL we have a new briefer out about this wave of laws, their implications for nonprofits, and the constitutional and policy concerns they raise. 2/6 www.icnl.org/our-work/us-...
Nonprofits are getting caught in the middle of a fight in the states over how to combat Chinese influence. A new Florida law bans nonprofits from fundraising in the state if they receive anything of value from those from China. Nebraska and Arkansas just enacted foreign influence registries. 1/6
Trump has federalized at least 2,000 National Guard forces and reportedly plans to deploy troops to Los Angeles over Governor Newsom’s objections. If that happens, it will be the first time since 1965 that a president has sent troops into a state without a state request. 1/19
The piece examines measures in place to prevent politicized investigations by the IRS and steps nonprofits can take to protect themselves. While the administration and others may try to politicize nonprofit status there are guardrails in place: guardrails that need to be protected and strengthened.