State Representative Tyrone Brooks, Sr. Indicted on Fraud and Tax Charges
Defendant Charged with Misappropriating Almost $1 Million in Charitable Donations
|U.S. Attorney’s Office May 16, 2013|
ATLANTA—A federal grand jury has indicted Tyrone Brooks, Sr. on charges that he misappropriated almost $1 million in charitable funds from Universal Humanities, a charity he founded in 1990, and the Georgia Association of Black Elected Officials (GABEO).
“This is a disappointing day. Representative Brooks has done much good in his life, both as a state legislator and civil rights leader. But the indictment charges that over many years, Representative Brooks misappropriated nearly $1 million in charitable donations intended to provide literacy training in underserved communities, and from GABEO—the organization for which he has served as president since 1993. Sadly, by diverting these funds to his own use, Representative Brooks deprived those most in need of critical assistance.”
Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office, stated: “While the FBI continues to make public corruption matters its number one priority within its criminal branch, we do so with a clear commitment to the rule of law. Today’s federal grand jury indictment reflects the commitment of the FBI and its law enforcement partners to follow the facts of these investigations wherever they lead us.”
“Mr. Brooks exploited two charitable organizations for his own personal financial gain which came at the expense of the intended beneficiaries of the charitable donations. IRS Criminal Investigation is committed to investigating individuals who use charitable organizations for their personal gain,” stated Veronica Hyman-Pillot, Special Agent in Charge, IRS Criminal Investigation. “Mr. Brooks defrauded not only the donors but also the American taxpayer by evading his tax obligations. Tax compliance should and must be equally shared among all Americans.”
Brooks, 67, of Atlanta, Georgia, was charged by a federal grand jury in a 30-count indictment that includes charges of mail, wire, and tax fraud. The indictment charges that, from the mid-1990s through 2012, Brooks solicited contributions from individuals and corporate donors to combat illiteracy and fund other charitable causes, but then used the money to pay personal expenses for himself and his family. The indictment was returned today, and Brooks will appear for arraignment on a date set by the court.
According to the Indictment
Universal Humanities Scheme
The indictment charges two fraud schemes, the first involving a tax-exempt charity, Universal Humanities, Inc., that Brooks established in the early 1990s. From at least 1995 through 2012, Brooks solicited contributions for Universal Humanities from corporate and individual donors purportedly to combat illiteracy in disadvantaged communities in Georgia and across the southeastern United States, eventually raising more than $780,000. Donors included the Coca-Cola Company ($400,000), Georgia Pacific Company ($140,000), Northside Hospital ($240,000), and others who gave smaller amounts. Brooks made specific false representations in his written solicitations about the work that Universal Humanities was doing to combat illiteracy and how the donated funds would be used, claiming that Universal Humanities had established literacy programs and was conducting workshops and tutoring and mentoring students. He also falsely claimed that Universal Humanities utilized a staff and operated under the direction of a board of directors.
The indictment alleges that in reality, Brooks did not use the donations to promote and address literacy in Georgia or elsewhere, or to retain a staff, occupy office space, fund workshops, hire instructors, or conduct programs attended by students. Instead, Brooks used the money to pay personal expenses for himself and members of his family, including home repairs, furniture, lawn service, life insurance, entertainment, personal credit card expenses, utility bills, food and clothing, dry cleaning, electronic equipment, jewelry, and payments on personal loans, among other personal expenses.
Brooks generally accomplished the diversion of funds by depositing the solicited donations into a bank account he established in the name of Universal Humanities, then almost immediately transferring the funds to a personal account, from which he paid personal expenses. At times, Brooks paid personal expenses directly from the Universal Humanities account.
More specifically, the indictment alleges that:
- Contrary to Brooks’ representations to donors, Universal Humanities never had a functioning board of directors. The individuals listed on the solicitations and incorporation documents were unaware that Brooks had identified them as Universal Humanities board members, and most had never even heard of the organization;
- Brooks represented in a 1999 solicitation that Universal Humanities had been “so successful” in Georgia that it was expanding its programs to other states in the Southeast and expected to have a projected budget of $500,000. In truth, Universal Humanities did not have an operational literacy program inside or outside of Georgia, nor did it have a projected budget of $500,000;
- Brooks represented in a 2010 solicitation that Universal Humanities’ literacy program, which Brooks called Visions of Literacy, consisted of a host of “outlets” created to increase literacy and included activities such as seminars, workshops, tutoring, mentoring, and rallies. Brooks further claimed that Universal Humanities and its “staff ha[d] over 40 years’ experience in assisting U.S. communities through a variety of efforts,” and that 10,000 people would be the direct beneficiaries of the literacy program. In truth, Universal Humanities and Brooks did not operate a functional literacy program, host the literacy activities described in the solicitation, or have a staff;
- Brooks represented in a 2011 solicitation that the Visions of Literacy program conducted monthly workshops, seminars, and advocacy outreach activities, and that the solicited funds would be used to hire retired teachers and administrators as “educational consultants” to gain “targeted results.” Instead, Brooks spent the funds donated in response to this solicitation on payments for a personal credit card charges, personal loan payments, utility bills, and a $500 check to a family member as a Christmas gift;
- Unbeknownst to GABEO, Brooks represented in a 2011 solicitation that GABEO was a “sister organization” to Universal Humanities and that GABEO was committed to the “growth and advancement of Universal Humanities.” Brooks falsely claimed that GABEO members spoke in public forums to implement and promote Universal Humanities’ programs; that GABEO members taught at Universal Humanities meetings and classes “alongside” Universal Humanities community organizers; and that GABEO members served on the Universal Humanities’ board of directors, steering committee, fundraising committee, and program management committees, though the purported committees were nonexistent; and
- Brooks submitted a form to the IRS under oath claiming that Universal Humanities incurred expenses of $62,652 for printing, postage, and publications in 2007; $67,601 for “commemorative events” in 2008; and $53,184 for charitable contributions, fundraising, and conferences in 2009. Just one year before, Brooks had submitted the same form under oath claiming that for the same years, Universal Humanities incurred expenses of only $8,900 for each of those years and had generated income of over $50,000.
As a result of Brooks’ misappropriation of donated funds, the intended beneficiaries of the funds did not receive the needed literacy training or assistance.
A second related scheme charged in the indictment alleges that Brooks also diverted charitable donations he solicited on behalf of GABEO and used much of the money to pay personal expenses for himself and his family. GABEO is an organization of state, county, and municipal elected officials that promotes voter registration, crime prevention, literacy and economic empowerment initiatives.
The indictment alleges that Brooks solicited contributions to GABEO from corporations, organizations, and individuals. When Brooks was elected as GABEO’s president in 1993, the organization already maintained an official bank account at a local bank. This account was administered by GABEO’s treasurer, and disbursements required two signatures by GABEO board members. In December 1997, Brooks secretly opened a second GABEO bank account at a different bank. Brooks set himself up as the sole signatory on this account and had the account statements sent to his address rather than the address of the GABEO treasurer. Brooks then deposited the donations he solicited on behalf of GABEO into this undisclosed account, and used much of these funds to pay personal expenses for himself and his relatives.
Between 2002 and 2012, businesses, civic, religious groups, and individuals contributed approximately $300,000 to GABEO through Brooks, which he then deposited into the undisclosed GABEO account. The indictment alleges that Brooks misappropriated donations he solicited on behalf of GABEO from corporations, local teacher unions, small business owners, and individual donors—all of whom relied on Brooks’ assurances that the contributions were intended to further GABEO’s community activities. The GABEO board was unaware of this activity and did not approve these transactions. In fact, the indictment alleges that after Brooks began diverting donations, members of GABEO’s board of directors noted the organization’s apparent loss of most of its corporate donations.
The indictment charges that Brooks misappropriated the GABEO funds in much the same manner as the Universal Humanities funds. The indictment alleges that generally, Brooks deposited funds he solicited on behalf of GABEO into the undisclosed GABEO account, then transferred the funds to his personal account, from which he paid his personal expenses. While Brooks utilized some of the GABEO donations to pay expenses related to GABEO’s annual meetings, he utilized much of the GABEO funds for personal expenses.
More specifically, the indictment charges that:
- During the time that Brooks acted as GABEO’s president, a variety of charitable groups, companies and individuals made donations to GABEO through Brooks. These donors relied on Brooks’ representations that GABEO would use the contributions to defray the costs of the organization’s annual meetings and convention, and to support GABEO’s programs;
- Brooks made specific false representations to donors about how the solicited funds would be used, claiming that the funds would be used to cover the expenses of annual GABEO meetings and support GABEO crime prevention and child hunger initiatives, voter registration, felon rehabilitation initiatives, and literacy programs. Donors included Coca Cola ($96,500), Georgia Power ($37,000), the International Brotherhood of Teamsters ($36,000), and others;
- Additionally, a professional organization of teachers contributed to GABEO through Brooks, relying on his assurances that the funds would go to support GABEO’s annual meetings and convention. An Atlanta law firm gave to GABEO through Brooks based on his representation that the funds would help fund a children’s school and GABEO’s annual convention. A bank contributed to GABEO through Brooks based upon his representations that the funds would be used by GABEO to construct a commemorative marker at Moore’s Ford Bridge. Instead, Brooks deposited these funds into the undisclosed GABEO account that he controlled and then transferred the money to pay to his personal account, ultimately using most of the contributions to pay personal expenses; and
- In November 2011, and May 2012, without the knowledge and consent of GABEO’s board of directors, Brooks obtained bank loans on behalf of GABEO. Brooks told the bank that GABEO intended to use the proceeds of both loans for Citizenship Education Get Out the Vote initiatives. Relying on Brooks’ representations, the bank approved both loans and issued the proceeds to Brooks. Brooks subsequently used much of the funds to pay personal expenses rather than for GABEO’s education and voter registration programs as he claimed in the loan applications.
By misappropriating GABEO donations for his personal use, Brooks benefitted himself at the expense of both GABEO and the communities most in need of the literacy, crime prevention and voter registration programs for which the funds were intended.
False Tax Returns Charges
Finally, the indictment charges that Brooks substantially underreported his income to the IRS for the years 2007 through 2011. Despite Brooks’ charged misappropriation of hundreds of thousands in donations to Universal Humanities and GABEO, his tax returns for the years between 2008 through 2011 falsely reported income of only approximately $35,000 annually.
Overview of the Charges
The indictment charges 30 counts of mail, wire, and tax fraud. The mail and wire fraud charges carry a maximum sentence of 20 years in prison and a fine of up to $250,000. The tax charges carry a maximum sentence of three years and a fine of up to $100,000. It is important to note that the sentences imposed may not approach the statutory maximum sentences, as the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
This case is being investigated by special agents of the Federal Bureau of Investigation and Internal Revenue Service.
Assistant United States Attorneys Kurt R. Erskine, Richard S. Moultrie, Jr., and Kamal Ghali are prosecuting the case.
Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.
For further information, please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.