Charity and its Former Leader Face Punishment for OFAC Violation

March 26, 2012 Posted by The Law Firm for Non-Profits, P.C. in Accountability, Board, Grantmaking, News

We warned you to check with the Treasury Department before making grants to foreign organizations, so as not to violate the Office of Foreign Assets Control (“OFAC”). Here is an example of why nonprofits need to know those rules.

Recently, Mehrdad Yasrebi, a former leader of the Child Foundation was found guilty of illegally funneling millions of dollars from the nonprofit to poor children in Iran.

Government prosecutors asserted that some of the money ended up in the hands of a radical cleric who supported terrorists, in violation of the U.S. trade embargo. The prosecutors asked the court to send Yasrebi to prison for 2.5 years.

As the judge found there was no evidence that the charity or Yasrebi had any involvement in funding terrorism, he only fined the charity $50,000 and put it on probation for 2 years. He also sentenced Yasrebi to 5 years probation and a $50,000 fine.

This is a good reminder that charities may be held liable for OFAC violations regardless of whether the board knows about the illegal activity. In fact, Yasrebi admitted to misleading others in the charity to get money to the Iranian children. Even so, the court did not find the charity to be blameless.

Make sure everyone on your board understands the rules of OFAC and the consequences of violating those rules. Visit the Treasury Department website or speak with an expert about structuring a foreign grantmaking program that satisfies all of the legal requirements.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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