Were Funds Misused?
$100 Million of Charitable Trust Funds Intended to Teach the `Single Tax' Idea of Henry George Have Been Illegally Diverted, Suit Alleges
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A lawuit alleging the wrongful diversion of about $100 million of charitable trust funds intended to teach and promote the Single Tax idea of 19th-centrury American economist and social philosopher Henry George has been filed by multiple institutional and individual plaintiffs in Arizona Superior Court.
The suit was filed May 4 Phoenix on behalf of individual Arizonans and Henry George groups from across the United States and around the world against various individual and institutional defendants, including the Phoenix-based Lincoln Foundation, Inc. and its alleged "alter ego," the Lincoln Institute of Land Policy in Cambridge, Mass., as well as Claremont-McKenna University, in Claremont, Calif.
According to the suit, the Lincoln Foundation, established by the late industrialist John C. Lincoln in 1947, has assets of more than $175 million, which the Foundation's articles of incorporation specify should be used solely "to teach and expound the ideas of Henry George as set forth in his book, Progress and Poverty." That book was published in San Francisco in 1879.
The suit contends that the Foundation's annual earnings exceed $5 million, "a substantial portion of which is used to combat, defeat, and disparage activities supportive of the Single Tax and Henry George...throughout the world."
The suit states that the Lincoln Institute was incorporated in 1974 "with the intention that it be, and it has been, the alter ego of the Foundation and the major beneficiary of Foundation funds and resources." According to the lawsuit, the institute is "wholly dependent on the Foundation for revenues."
Plaintiffs allege that the Institute "was created and operated in bad faith and in breach of the fiduciary duties and obligations of defendants...by attempting to circumvent the plain and evident purpose of the Foundation and its trust funds."
The suit alleges that since its inception the Institute has received a total of about $100 million illegally diverted from the Foundation and that "said trust funds have been used to belittle and to combat the very principles that the Foundation was created to support."
According to the lawsuit, "The Single Tax, as propounded by Henry George and John C. Lincoln, proposed that all taxes be abolished except a tax on the community-produced ground rent of land, excluding buildings and other improvements."
The suit alleges that the Institute "has never taught the Single Tax, but has regularly and repeatedly disparaged the...idea."
The suit further alleges that "through personal friendships with [Institute] Board members," defendants Joan Youngman and Jane Malme, "who are lawyers, not economists," have received more than $1 million "for appearing at symposia and meetings, and writing books and articles which wholly ignore or are highly critical of the Single Tax idea, although said books and articles are useless and wholly without merit, or are damaging insofar as the purposes of the Foundation are concerned."
Additionally, the suit alleges that Malme, Youngman and Institute President H. James Brown worked with the Agency for International Development and the World Bank to oppose the adoption or continuation of Single Tax measures and Henry George tax reforms in post-communist Russia and Estonia. The suit further alleges that Malme, Youngman and Brown arranged for an interview that resulted in an article being published in The Economist which disparaged Henry George, his adherents and the Single Tax idea.
The suit alleges that the Institute and its agents have worked to undermine land value taxation or the Single Tax idea in Japan, South Africa and Jamaica, as well as in New Hampshire, where Institute representatives "have advocated a state sales tax and other taxes on consumption and business, countering a bill calling for a statewide tax on land, excluding improvements, introduced by a legislator who supported Henry George views.
The suit further alleges that about $1 million of Foundation funds have been paid to Claremont-McKenna University even though "Claremont has never taught or expounded the ideas of Henry George." The suit alleges that "Claremont wa made a recipient of Foundation funds by reason of friendship between defendant [Jon] Cohen, who is a graduate of Claremont, and defendant [John] Maguire, who is...President of the Claremont Graduate School." According to the suit, Cohen is secretary of the Foundation and Maguire was a member of the Foundation's board of directors.
Various descendants of John C. Lincoln, including his son David C. Lincoln and David's daughter Kathryn Lincoln, are also named as defendants in the suit.
For more information, contact Marion Sapiro, phone (949) 495-3805. If you have an opinion on this that you wish to make public, you can tell The Progress Report right now:
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