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Student judiciary case exposed as sham

9. April 2005 • Matt Hollerbach
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See below for a message explaining how the plaintiff in this case which has been occupying U-M’s student government might have known all along his case had no grounds.

Date: Fri, 8 Apr 2005 13:23:59 -0400
From: Brittany Fox
Reply-To: Brittany Fox
To: msa.reps@umich.edu
Subject: PLEASE READ: Important 501 h info

Dear MSA Reps,

On Tuesday MSA Rep Mat Brener had informed all of the MSA reps that not only was it possible for MSA to use 20% of its funds for lobbying efforts with the 501h election, but that he had talked with one of MSA’s accountants at UM and found that we had been using this option for a number of years. In fact, Students for PIRGIM had found that this information is actually public knowledge, as MSA’s tax forms are available online through a website: www.guidestar.com. By setting up a free account, you may search for MSA’s form 990’s (the form that nonprofits file for their taxes each year) from past years. I have instructions at the bottom of this email to access this information online, as well as a pdf file of the 2003 taxes attached.

Groups can file for 501h election just once by filling out a form 5768. After form 5768 is filed, the group files as an electing public charity in form 990. The area of the form 990 for the 501 h election is on page 11 of the 2003 pdf file, part VI/A. You can see for yourself that MSA has quite clearly filed as a 501 h electing nonprofit.

In researching this last night, we stumbled upon something interesting on 2003 fiscal year’s taxes. As 2003-04’s acting Treasurer, Mr. Elliott Wells-Reid had filed MSA’s taxes using the 501 h election. While Mr. Wells-Reid’s printed name is partially blackened out (probably for privacy reasons), the letters “ID” of his last name are viewable, as is Mr. Wells-Reid’s signature, and the date and the title of Treasurer.

For the new reps who may not be familiar with this case, Mr. Wells-Reid originally brought this case to trial before CSJ, claiming that funding Students for PIRGIM would threaten MSA’s tax 501©3 tax status, assuming that MSA was a non-electing nonprofit. As seen on page 11 of the pdf file, MSA clearly has used the 501 h election, allowing MSA to use up to 20% of its expenditures for lobbying.

Further, above Mr. Wells-Reid’s signature is this statement:

“Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief it is true, correct, and complete.”

To be clear, I am not claiming that Mr. Wells-Reid was dishonest in his concern over MSA’s tax status, or that in signing the tax forms last year, he did so with a thorough knowledge of 501©3 tax law that some of us possess now due to the issues with this case. However, it again shows the baselessness of these charges, very serious charges, which, given his previous role as Treasurer and his initiative and responsibility in bringing the case forward, Mr. Wells-Reid should not have overlooked.

Because of this new information, an appeal should take place by the end of the year, or at the very least, CSJ’s previous ruling should not be enforced. Within CSJ’s code is the option to file for a Stay of Enforcement. If a party waiting on an appeal requests, CSJ can decide not to enforce their previous ruling until an appeal can take place. Only two of the ten CSJ justices are needed for this stay to go into effect. Students for PIRGIM will be filing for a stay soon, and we hope that MSA leadership will join us in doing so, as well.

Sincerely,

Rese

INSTRUCTIONS FOR VIEWING MSA’S TAXES ONLINE
Go to www.guidestar.com and create a free account. Log in. Once you are logged in you are directed to a page that allows you to search for nonprofits. Type in Michigan Student Assembly, and a link for MSA should pop up. Click on it. On the left hand side there is a link to form 990. Click on it. You can then view pdf files of MSA’s tax forms from fiscal years 1997-2003.
—
Brittany Therese Fox
External Relations Chair, Michigan Student Assembly (MSA)
Campus Outreach Coordinator, Students for PIRGIM



  1. Good to see that after all these years, MSA is still finding ways to waste student fees. Can’t the junior wanna-be politicians find a way to gloss their resumes that doesn’t involve students’ (and parents) money?
       —John Q.    Apr. 9 '05 - 09:04PM    #
  2. Uh oh.

    Is some headz gonna roll??
       —David Boyle    Apr. 10 '05 - 01:01AM    #
  3. Would someone explain this in terms that a layperson can understand?
       —JennyD    Apr. 10 '05 - 06:42PM    #
  4. Students for PIRGIM applied for a status that would net them enough cash to hire a professional organizer to help with their various campaigns. Elliot Wells-Reid, an MSA member, employed some petty bureacratic tricks to prevent this, presumably out of personal political differences (I don’t know his personal politics myself). It now appears that Wells-Reid was not only being petty, but also was either (a) too ignorant to have been given certain responsibilties he has held, or else (b) totally and knowingly lying in his objections to S4PIRGIM’s request, and, either way, is about to be nailed to the wall by the MSA members who support S4P.

    That’s how I understand it, from my position as a non S4P member who is on their e-mail list.
       —Murph    Apr. 11 '05 - 12:55AM    #
  5. I still don’t get it, but it sounds quite nefarious.
       —JennyD    Apr. 11 '05 - 01:16AM    #
  6. Why can’t this group go out and raise its own money? I’m not defending these tactics but this is what I hated from back in the days – student groups (and their MSA apparatchiks) who saw the MSA budget as their personal pot of gold to be raided for their pet projects. MSA can and should be lobbying on relevant issues. MSA should not be funding lobbying efforts by student groups. As far as I’m concerned, it’s outside the mission of MSA and why student fees go to fund it.
       —John Q.    Apr. 11 '05 - 04:21AM    #
  7. Nice assumptions about someone you don’t know.

    Elliott is very gay and very liberal.

    He just has the good sense to understand that to fund PIRGIM would put MSA’s tax-exempt status in jeopardy.
       —T.J.    Apr. 11 '05 - 04:43AM    #
  8. TJ- Well, except that it apparently wouldn’t.
    What’s it like living as an illiterate?
       —js    Apr. 11 '05 - 12:52PM    #
  9. John, I think that a number of the MSA representatives see Students for PIRGIM as worthwhile (they seemed to be looking at a clear majority of MSA’s approval before being derailed like this). S4P’s biggest projects right now and in the immediate past are with regards to the price of textbooks, tenants’ rights (education on and providing an informational hotline about) in Ann Arbor, and student voting procedures in Michigan. I suppose you could say, “MSA should be doing all of this in-house, rather than giving money to some outside group!” but this is all stuff that Students for PIRGIM has been working on already, with volunteer labor, so I think MSA (at least, the part that supports S4P) figures they’re getting a pretty good deal.

    And, TJ, the whole point of this is to figure out whether or not Elliot was acting out of good sense – so far, seems like not. What does his being gay and/or liberal have to do with anything? Are you saying that gay liberals are infallible, because that’d be quite unexpected. . .
       —Murph    Apr. 11 '05 - 01:26PM    #
  10. But if T.J. is an infallible gay liberal, that weakens your argument, Murph.
       —David Boyle    Apr. 11 '05 - 03:10PM    #
  11. Responding to why they can’t raise their own money:

    Student PIRGs gain their credibility through being institutionally funded by students. This is how they remain explicitly accountable to student interests.

    And yes, TJ, in fact there was never any danger for MSA, and MSA accountants have confirmed this. So does tax law. And legal precedent. If you had been paying the slightest attention you would have seen this.
       —matt hollerbach    Apr. 11 '05 - 06:15PM    #
  12. I’m curious as to how they would propose to have any effect on textbook prices—they are set by the market. Would they find university money to subsidize textbook purcahses by students?
       —Brandon    Apr. 11 '05 - 06:55PM    #
  13. Brandon, “the market” is full of actors and interpreters. “Market price” is what people are willing to pay, not what something has to be priced at.

    A student-run bookstore (cooperative?) could reduce labor and/or salary costs or take a slimmer profit margin or band with other university book cooperatives to get better deals on bulk purchases. Think prescription drugs; how are states and consumers proposing softening the blow of those prices?
       —Dale    Apr. 11 '05 - 07:11PM    #
  14. Actually, the campaign is targeted at textbook publishers, and student pirgs in other states have effectively used pressure from students and professors to compel the companies to lower their costs.
       —matt hollerbach    Apr. 11 '05 - 08:40PM    #
  15. Matt,

    You stated:

    “Student PIRGs gain their credibility through being institutionally funded by students. This is how they remain explicitly accountable to student interests.”

    So if the PIRG is funded by students directly (not through student fees), they lack credibility? You’re kidding, right?
       —John Q    Apr. 11 '05 - 09:06PM    #
  16. Not at all. However, would you like to guess at the likelihood of PIRGIM raising enough money directly from students? If students were asked directly for money for services like a Student PIRG, there is no chance they’d be funded. That’s the point of a student government, to act on the behalf of the students.

    If funding had to come directly from students who had a choice in the matter, sexual assault services, counseling services, arts programming, and other things would never have enough money to operate.

    Now, if you question the value of a Student PIRG, let’s have that debate; not another in its place.
       —matt hollerbach    Apr. 11 '05 - 09:14PM    #
  17. Brandon, I had a housemate at one point whose officemate would buy textbooks at home in Singapore for the whole lab and ship them back to A2 for a 33% savings (including shipping!) over buying them locally. I can see a massive international textbook shopping service as a rather blunt instrument for forcing the publishers to stop abusing students.

    Perhaps more appropriate, though, would be a campaign to convince professors to use the same darn version of the textbook that’s been in use for the last four years – and which hundreds of are available, used, from bookstores, Amazon, eBay, and friends in your department – rather than upgrading to the latest edition whenever one is available. Freshman physics teaches the same material now that it did ten years ago; why have there been six new editions of the same textbook? $$$ for the publishers.

    “Market” does not mean “price fixing by the publishers.” In fact, it very explicitly means the opposite, and I’m all for any demonstration that textbook buyers are market players too, and that they do have the power to make a difference.
       —Murph    Apr. 11 '05 - 09:45PM    #
  18. Murph,

    You said “Elliot Wells-Reid, an MSA member, employed some petty bureacratic tricks to prevent this, presumably out of personal political differences (I don’t know his personal politics myself)”

    That’s why I told you what his politics were. You’re the one who brought it up.

    To the asswipes calling me illiterate –
    Just because you say something does not make it true, nor does it mean that I have to accept it. I saw what was written and I want to see some legal justification before I accept your word as golden.

    MSA had a lawyer, a real lawyer, as SGC for a year and he disallowed a lot of things because of a potential violation of tax-exempt status. Three weeks after finishing his term as SGC, he was a practicing attorney in Chicago. I take his word over a couple of mindless undergrads who are obviously very passionate about their little treehugging cult.
       —T.J.    Apr. 12 '05 - 06:10AM    #
  19. Hollerbach,

    You know, within an ivory tower environment, you can get away with talking to people like you do. But if you keep talking to people the way you do, but do it in the real world, you are going to get the shit kicked out of you more times than you would like.

    Must be nice to be a spoiled rich kid who has never had to worry about the consequences of his words or actions. I would like to see you go where I grew up and talk to people the way you do.
       —T.J.    Apr. 12 '05 - 06:14AM    #
  20. t.j.,
    to be far, (re: holler-back!), what did any of what you said have to do with the substance of his arguement???

    lame, lame, lame,
    ari p.
       —Ari P.    Apr. 12 '05 - 07:19AM    #
  21. “However, would you like to guess at the likelihood of PIRGIM raising enough money directly from students?”

    I don’t know but if students see it worth their money, then it will get funded. If it’s not seen as worth their money, what does that tell you?

    “That’s the point of a student government, to act on the behalf of the students.”

    Agreed – but MSA should be doing the lobbying, not farming that responsibility and the dollars to a group that may or may not have the best interests of MSA at heart and over which MSA has no real accountability.
       —John Q    Apr. 12 '05 - 02:39PM    #
  22. TJ- Wow, veiled threats and moronic screeching. Glad to have you back!
    And you’re right, TJ. I should have said “functionally illiterate.” I didn’t mean to use hyperbole when discussing your plight. It’s not fair to you, and might keep you from getting the help you need.
       —js    Apr. 12 '05 - 04:14PM    #
  23. Ari,

    I already addressed his argument. I simply decided to address his tone. It wouldn’t sit well where I come from.

    Now, he was born with a silver spoon (Grosse Pointe) in his mouth and has never experienced the real world. He may never. But one day, his car will break down and he will need it towed or fixed or something. If he talks to the tow truck operator or a mechanic or another “normal” guy like he does the people here – and given his attitude, it’s obvious that he thinks everyone is beneath him – he’s going to end up seriously injured.

    Don’t get me wrong, it has nothing to do with his politics. I told Justin Wilson the same thing rather forcefully. He damn near pissed his pants. And after that, he acted a lot differently. Did him some good, I think. And you don’t see me saying the same thing to JS, because I get the feeling that he has experienced life a little. And I am not saying it to you because your politics and attitude probably didn’t sit well in Georgia. I am sure you have had your share of beatings.

    Hollerbach is a stuck-up, pretentious, pompous asswipe who needs to be put in his place. If he doesn’t start talking to people as human beings, he’s going to end up seriously injured. And calling the cops and threatening to sue the person doesn’t mean shit in the real world.
       —T.J.    Apr. 12 '05 - 05:07PM    #
  24. By the way, JS, if I wanted to threaten someone, I would just fucking say it. You should know by now that I don’t mince words and I don’t hold back.
       —T.J.    Apr. 12 '05 - 05:07PM    #
  25. As a member of Students for PIRGIM, I wanted to clarify a point about funding. Our proposal requests MSA funding for a one-year trial period. After that period, we would request an increase in student fees, which would have to be approved both by the students directly and by the Board of Regents. So ultimately, we would require the direct support of students. The purpose of the one-year trial is to show students what a fully-funded PIRGIM chapter would look like and what it could do for students—in essence, to prove ourselves. I’m working more on the housing campaign than on chapter issues, but I can also field more specific chapter-related questions to other PIRGIM members if anyone would like.
       —Audrey    Apr. 12 '05 - 08:36PM    #
  26. Um, I was born in Colorado.
       —matt hollerbach    Apr. 12 '05 - 09:42PM    #
  27. “If he doesn’t start talking to people as human beings, he’s going to end up seriously injured.” -t.j.

    now, let’s see the sentence right before this one:

    “Hollerbach is a stuck-up, pretentious, pompous asswipe who needs to be put in his place.” -t.j.

    “BlackAdder: Baldrick, do you know what irony is?
    Baldrick: Yeah, its like goldy or bronzy except iron.
    BlackAdder: Eat your turnips.”
    -BlackAdder

    rock,
    ari p.
       —Ari P.    Apr. 12 '05 - 09:45PM    #
  28. Audrey,

    What happens if MSA needs to lobby on an issue that PIRGIM isn’t interested in participating. What happens then? If PIRGIM is given MSA’s allotment of lobbying dollars, where does that leave MSA?
       —John Q.    Apr. 13 '05 - 01:51AM    #
  29. That’s a good question. As it turns out, MSA’s lobbying election total is about $92,000, and a pilot student PIRGIM chapter will be $20,000. If the chapter remains and becomes a full chapter, it will have a yearly operating budget of $60,000 and would incorporate as its own 501c3 organization.

    However, I should point out that the chapter here would engage in no lobbying. They have a set of plans which do not constitute lobbying in any way (small or large) according to tax code, so the whole issue is moot anyway.

    At this point, the 501h thing is primarily useful in casting the whole decision in the light it deserves. It was tragically unresearched and uninformed, and the very basis of the case was totally off.
       —matt hollerbach    Apr. 13 '05 - 02:26AM    #
  30. PS—sorry, I’m not Audrey. I think she might have some things to add.
       —matt hollerbach    Apr. 13 '05 - 02:28AM    #
  31. Matt,

    How much does MSA currently spend on lobbying activities?
       —John Q    Apr. 13 '05 - 03:09PM    #
  32. John Q. – I forwarded your question to Carolyn Hwang, Students for PIRGIM’s chair, and here is her response:

    The only reasons I foresee us refusing to work on something MSA wants us to work on is 1) we already have enough going on and don’t have enough insitutional capacity or time to take on something else, 2) it’s against our mission; not a public interest issue or it’s ideological whereas we are non-ideological, 3) it would be a waste of time or futile, 4) there are no students interested in coordinating or working on the issue.

    If MSA itself wants to lobby however, the campus organizer can work with individuals on the Assembly to support their efforts, train them if necessary and help them plan their strategy. The organizer is a resource for all student groups, and anyone can approach him or her for advice or support.

    Please let me know if you have any more questions.
       —Audrey    Apr. 13 '05 - 11:09PM    #
  33. (Allow me to note that I generally do not buy claims to be non-ideological. No, Audrey, not even from you, sorry. Students for PIRGIM does seem to me to be impressively non-partisan and issue-focused, but I thought I’d chip in my skepticism before TJ gave his rendition.)
       —Murph    Apr. 14 '05 - 04:07AM    #