When Nonprofits Cross the Line: $2.9M Charity Fraud Exposed!

Charitable organizations recognized by the IRS as tax-exempt can enjoy tax-favored status if they strictly follow IRS rules. Among other things, nonprofits must not serve private interests, engage in illegal activity or violate public policy. Violations can result in loss of tax-exempt status, fines and more. One nonprofit agency provided meals for low-income children. After scrutiny from the IRS Criminal Investigation Unit, the FBI and the U.S. Postal Inspection Service, the director was found to have inflated the number of children served to fraudulently obtain $2.9 million in federal funds, much of which he used personally. He pleaded guilty and faces up to 25 years in prison.