WASHINGTON, D.C. – The IRS Form 990 tax filings reported by the Barack Obama Foundation in 2014 and 2015 shows Obama has hired as the foundation’s accountant a small CPA firm in Chicago that has been reprimanded by the Public Company Accounting Oversight Board in Washington, D.C., for having filed a audit considered deficient according to industry accepted accounting standards.

According to the Barack Obama Foundation’s 2014 and 2015 IRS Form 990s and to its website, the Chicago CPA firm, Washington, Pittman & McKeever, LLC, was the audit firm preparing both tax filings.

Reckless Endangerment?

Charles Ortel, a Wall Street analyst who has been studying presidential foundations since February 2015 cautions that “the public record that is known so far suggests that politically connected partisans serving as Barack Obama Foundation trustees may be emulating the long and dangerous record of Clinton Foundation trustees, also politically connected and partisan, who flout state, federal, and foreign charity and solicitation laws with wanton disregard for their solemn legal duties.”

“One key obligation”, Ortel added, “is to select an accounting firm that is qualified and prepared to render opinions and provide services that result in issuance of independently audited financial statements prepared fully in compliance with Generally Accepted Accounting Standards in the United States, on a consistent basis, year to year.”

Ortel continued: “While WPM was organized by an historic African-American woman, the first female CPA, it does not seem to be a particularly large firm or even have offices outside the United States, where the Barack Obama Foundation claims it may already be operating. In addition, WPM’s auditing capabilities have been questioned by oversight authorities, a fact that should raise hackles among Barack Obama Foundation trustees and independent lawyers, if any are actually engaged.”

Ortel pointed out the Trustees of a federally authorized tax-exempt charity such as the Barack Obama Foundation are ultimately responsible for all of its operations–each trustee owes a duty of care, a duty of obedience to laws, and a duty of loyalty to protect the valuable tax-exempt status of the organization.

Even if the charity enters into agreements with trustees that purport to insulate them from possible liabilities, these “indemnification” agreements generally cannot protect against reckless behavior.

Obama Foundation Auditor Noted for Deficiency

On June 16, 2016, the Public Company Accounting Oversight Board in Washington, D.C., published a 2015 inspection report investigating Washington, Pittman & McKeever, LLC.

In the publicly released version of the Public Company Accounting Oversight Board report, the following deficiency was noted for Washington, Pittman & McKeever, LLC:

One of the deficiencies identified was of such significance that it appeared to the inspection team that the Firm, at the time it issued its audit report, had not obtained sufficient appropriate audit evidence to support its opinion that the financial statements were presented fairly, in all material respects, in accordance with the applicable financial reporting framework. In other words, in this audit, the auditor issued an opinion without satisfying its fundamental obligation to obtain reasonable assurance about whether the financial statements were free of material misstatement.

While the Public Company Accounting Oversight Board did not name the client involved in this deficient audit, the report noted that Washington, Pittman & McKeever, LLC – a firm the report listed as having 4 partners and 16 professional staff in total – had only one audit client in 2015, the year during which the audit deficiency was noted.

Given that both the Barack Obama Foundation IRS Form 990 for 2014 and 2015 list Washington, Pittman, and McKeever, LLC as the paid preparer of the tax report, it is possible (but not certain) the deficiency noted by the Public Company Accounting Oversight Board involved accounting Washington, Pittman, and McKeever LLC did for the Barack Obama Foundation.

Posted on the Barack Obama Foundation website are the foundation’s 2015 and 2016 financial audited statements, both prepared by Washington, Pittman & McKeever, LLC.

Presidential Library or Global Slush Fund?

Charles Ortel has demonstrated that the Clinton Foundation is operated in defiance of applicable state, federal, and foreign laws.

Now Ortel asks: “Is the Barack Obama Foundation simply following the example set by Clinton Foundation trustees in their reckless behavior evidenced since 1997?

Moreover, are government authorities, who apparently are unwilling to discharge their duties under the U.S. and state constitutions, also guilty of enabling charity frauds? And why are ordinary citizens punished for far less serious scams with long prison sentences, and large financial penalties?”

Ortel notes: “As in the case of the Clinton Foundation that veered off its legally authorized corporate charter to pursue illegal activities including illegal international activities starting after Bill Clinton left the White House in 2001, the Barack Obama Foundation appears to be following a similar course.”

Moreover, Ortel stresses, its trustees are using a much smaller firm than the one used by Clinton Foundation trustees, BKD, LLP (“BKD”) which demonstrated, beyond doubt, a defiant and reckless pattern over multiple years of issuing manifestly false and materially misleading financial statements outside compliance of applicable laws and regulations.”

Both the 2014 and 2015 IRS Form 990s list as the purpose of the Barack Obama Foundation the development of the Presidential Center, to include the Presidential Library and the Presidential Papers Collection, under a contractual arrangement with the National Archives and Records Administration (NARA).

Again, the 2016 audited financial statement makes clear the primary purpose for which the Barack Obama Foundation was authorized to receive tax-deductible contributions was to create the Obama Presidential Center.

The 2016 audited financial statement reads on page 9 as follows:

Nature of Activities The Barack Obama Foundation (the “Foundation”) is a not-for-profit foundation. In the months and years to come, our charge is to create an engaging and welcoming place that will inspire people globally to show up for the most important office in any democracy – that of citizen. The Foundation will design and build the Obama Presidential Center (“the Center), set in the heart of historic Jackson Park, on Chicago’s South Side. The Center will tell the story of the Obama Administration, its achievements, challenges and lessons learned – as well as the millions of Americans, in and out of government, at all levels of society, who made them possible. The Center will be based on the South Side of Chicago, but have projects all over the city, country, and world. There is nothing in either IRS Form 990 for 2014 or 2015, or in the audited financial statements for 2015 and 2016, to indicate the Barack Obama Foundation had applied to the IRS to alter the foundation’s purpose, or to request a new IRS determination letter authorizing the foundation to merge with My Brother’s Keeper Alliance, a program Barack Obama started in the White House that was announced in 2017 to be merging with the Barack Obama Foundation.

Nor is it clear how the Barack Obama Foundation could “have projects all over the city, country, and world,” if the sole purpose for which the foundation was created was to establish the Obama Presidential Center.

Ortel concludes: “Unlike Clinton Foundation trustees who have a 20-year record that screams out for prosecutions by state, federal, and foreign governments, Barack Obama Foundation trustees have only recently begun to engage in highly dangerous behavior and may not have solicited widely or raised substantial monetary donations yet. One hopes Barack Obama Foundation trustees will engage independent counsel who are expert in relevant charity laws before it becomes impossible for the existing charity to operate as originally intended.”

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