By JOSEPH G. LARIOSA
(© 2017 Journal GlobaLinks)
CHICAGO (JGL) — For more than three decades, the Rizal Community Center in the north side of Chicago, Illinois has been an iconic Filipinos’ home away from home. Visiting Philippine dignitaries,
including President Fidel V. Ramos, Sen. Loren Legarda and former Senate President Manny Villar, had set foot in the Center.
Now, it is also a private home sweet home of newcomer Filipino American Executive Director Elaine Lehman.
That is, if the new Board of Directors of the Filipino American Council of Greater Chicago (FACC) can convince the Circuit Court of the Cook County of Illinois in Chicago that when they approved and/or ratified the effort of Ms. Lehman to convert the second floor of the RCC located at 1332 W. Irving Park Road into her own private quarter, they did not violate the so called “Excess Benefit Transactions and Intermediate Sanctions” under the Non-For-Profit (NFP) Law of Illinois.
The new officers of the FACC Board are former FACC President Alex Gonzales as Chair; Immediate Past President Rufino Crisostomo, Immediate Past Chair; Robert Mittenthal, Chair-Elect; Alfredo Barranco, Vice Chair; Estrella Alamar, Corporate Secretary; Joy Cabrera, Treasurer; Dalisay Villalon, Dr. Virgilio Jonson, Art Dilay, Dr. Carmen Baldonaza and Irene Botoyan, advisory board members.
So, that the FACC Board of Directors will not violate their fiduciary duties, they must ensure that they did not engage in what is construed by the U.S. Internal Revenue Service (IRS) as an “excess benefit transaction.”
An excess benefit transaction generally occurs if an NFP organization directly or indirectly provides compensation or other economic benefits to a “disqualified person” and those benefits are worth more than what the disqualified person provides in exchange.
HOW DO YOU SOLVE A PROBLEM LIKE ELAINE'S?
SOME MEMBERS of the Board Elaine Lehman describes as hyphenated Filipino-American Council of Greater Chicago (FACC) whom she single-handedly deposed after choosing her as its Executive Director (think of Filipino value of utang na loob or gratefulness being thrown out of the window) had regrouped to discuss how they will answer Lehman’s answer to their lawsuit as intervenor un-hyphenated Filipino American Council of Greater Chicago last Monday (Aug. 15) in Chicago, Illinois. They are trying to figure out how they can force Ms. Lehman out of the Rizal Center. Ms. Lehman recruited new FACC Board Members to support her whim to allow her to take up a private residential space inside the Filipino community center. Composite photo top right shows Executive Committee Chair Jerry B. Clarito (third from right) going over Lehman’s answer to their lawsuit while Pedro (Nonoy) Tabo from right, Wilfredo Imperial and Mariano “Anong” Santos of Pinoy Newsmagazine look on. Top left photo shows from left Elsie Sy-Niebar of Via Times newsmagazine, Dennis Cruz and Bobby Luna. Left photo at bottom shows from left Marilou Tabo, Mae Lant and Sally Richmond. Right bottom photo shows Dr. Alice Joaquin and Atty. Arcadio “Jun” Joaquin. (JGL Photo by JOSEPH G. LARIOSA)
The difference in value is the “excess benefit.” Furthermore, any benefit transferred to a disqualified person that is not approved as compensation for that person and is not recorded and reported by the NFP organization as compensation at the time it was transferred will automatically be considered an excess benefit.
EXECUTIVE DIRECTOR AND RESIDENT MANAGER
In her Verified Answer filed by her lawyer Jonathan Strauss, Elaine Lehman, the glib-tongued stranger to the community, after long drawn-out public denial, admitted to Judge Sophia Hall of the Circuit Court of Cook County that as Executive Director of the Filipino American Council of Greater Chicago, the non-profit organization that calls Rizal Community Center home, the FACC Board Members have also named her “Resident Manager,” a heretofore unknown position, that allows her to take up residence inside RCC.
Filipino American lawyer Arcadio “Jun” Joaquin, the lawyer for what Lehman calls the hyphenated members of the Filipino-American Council of Greater Chicago Board of Directors she single-handedly deposed in a “coup d’etat,” filed an Emergency Motion for Temporary Restraining Order and Preliminary Injunction with Notice before Judge Hall, will now have to file a motion for discovery to flesh out who were Lehman’s unhyphenated members of the Filipino American Council of Greater Chicago Board of Directors, who approved/ratified Ms. Elaine’s court declaration that, she was also “appointed (as an unprecedented) Executive Director of the FACC by its Board of Directors on January 27, 2017, initially as an unpaid volunteer. Subsequently, the Board of Directors authorized Ms. Lehman to move her residence into the Rizal Community Center, a three-story building owned by the FACC … rent free and in lieu of salary as executive director in order to maintain security and order in the RCC.”
Mr. Joaquin can depose any, if not all of the unhyphenated FACC Board of Directors, to explain to the court’s satisfaction that their “quid pro quo” arrangement did not result in an “excess benefit” for Ms. Lehman.
For instance, was Ms. Lehman part of the FACC officers, who took part in the decision to convert one of the RCC rooms into her own residential space? If she was, then, there is a conflict-of-interest in the decision. Did the Board of Directors conduct a sampling survey in the neighborhood to find out the amount of monthly rental that should be paid by Ms. Lehman if she were a paying occupant to a similar rooming space she is occupying in the RCC and the amenities in the RCC whose occupancy and use could contribute to the cost of maintenance, for instance, electricity, phone bills, etc., and the wear-and-tear of the building?
RIZAL COMMUNITY CENTER:
THIS RIZAL COMMUNITY Center at 1332 West Irving Park Road in Chicago, Illinois, home away from home of the Filipinos in the Midwest for more than three decades is now also a private home sweet home of unprecedented Executive Director Elaine Lehman, who recruited a new crop of members of the Board of the Filipino American Council of Greater Chicago, who, in turn, allowed her to reside inside the center by appointing her as the unprecedented Resident Manager! The Center has also hosted visiting Philippine dignitaries, notably President Fidel V. Ramos. (JGL Photo by JOSEPH G. LARIOSA)
And was the agreed monthly rent commensurate to the services that she performed or would perform for the FACC and the RCC? And was the monthly rental cost in the best interest of the FACC and RCC? Is the monthly rental rate tied to annual inflationary rate? And what is the length of time and other terms of agreement that let Ms. Lehman use the RCC as her private residence? What will be the criteria to extend or limit her occupancy of the RCC?
The NPF Law of Illinois allows any FACC member to challenge any changes in the documents of an NPF, like FACC, if its articles of incorporation that are the bases of the Board members’ decision for as long as they have been filed with the Illinois Secretary of State to become effective, and then should have been recorded with the recorder of deeds in the county where the NFP’s registered agent is located.
In addition, the NFP’s articles of incorporation and its by-laws (among other documents) should have been filed with the IRS as attachments to the Form 1023 – Application for Recognition of Exemption and with the Illinois Attorney General as attachments to Form CO-1, Charitable Organization Registration statement.
If the NFP amends its articles of incorporation, it will need to file the amendment with the Illinois Secretary of State and have the amendment recorded with the recorder of deeds in the county where the NFP’s registered agent is located. The NFP must notify the Secretary of State of any change in its registered agent or registered office using Form NFP 105.10/105.20.
Also, did the Members of the Board obtain a certificate of zoning compliance or deconversation to alter the RCC before converting the second floor into a residential space?
According to Chicago City Hall, illegal conversion may pose a serious life-safety threat to residents of the property. It is highly probable that the illegal unit may lack adequate ventilation, ceiling height and natural lighting as well as lack adequate exiting in the event of a fire or other emergency. Other illegal conversions may result in the building forfeiting City garbage pick-up.
The Chicago City website says, “If you know of or suspect an illegal conversion in your neighborhood, you may contact 311 City Services, who will route your call to the appropriate City department(s) for inspection and enforcement action.”
Another issue that Ms. Lehman will have to contend with is why did she not withdraw or cancel the garage permit from Chicago City Hall so the FACC/RCC will stop collecting parking fees from Chicago Cubs fans parking by the RCC yard during Cub’s home games?
Under the non-for-profit law of Illinois, the FACC has no business collecting donation from “unrelated business income” (UBTI). Unrelated business income is the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity.
For example, a museum has a theater auditorium designed for showing educational films in connection with its program of public education in the arts and sciences. The theater is a principal feature of the museum and operates continuously while the museum is open to the public. If the organization also operates the theater as a motion picture theater for the public when the museum is closed, the activity is an unrelated trade or business, dual use of assets or facilities.
If a NFP organization makes $1,000 or more a year from unrelated businesses, it is required to file Form 990-T with the IRS. Each organization must file a separate Form 990-T, except section 501(c)(2) title-holding corporations and organization receiving their earnings that file a consolidated return under section 1501.
If a NFP organization does not file Form 990-T, if it will lose its tax-exempt status.