Yesterday, a judge in Spain named Princess Cristina, King Juan Carlos’s youngest daughter, as a suspect in an ongoing money laundering and tax fraud case involving the Princess’s husband, Inaki Urdangarin. The judge alleges that the Princess and her husband participated in a scheme to embezzle approximately $8 million in public funds, which they allegedly hid in offshore accounts and used to renovate their mansion. The judge’s report states that the couple carried out the scheme by laundering money paid to their non-profit, the Noos Foundation, through a company called Aizoon.
We have investigated countless cases involving individuals who make fraudulent payments to shell companies that have little or no ostensible purpose beyond hiding assets. We cannot peer directly into the bank accounts of these companies to determine what assets they hold. We can, however, search for real property, stocks, or other assets the companies own which may be reflected in the public record. We can also speak to former employees of the subject’s legitimate companies to determine how and when the shell companies were used. Occasionally, discovery of the mere fact that the companies exist can be enough to lead a suspected wrongdoer to settle.
If this case involved a U.S. nonprofit, rather than a Spanish one, then much of its financial information would be publicly available. Most U.S. nonprofits are required to publicly file their three most recent informational tax returns in what is called a Form 990. You can access 990’s for many nonprofits online through services like GuideStar. You can also directly request them from the nonprofit, which is required by law to comply with the request. Details regarding 990 disclosure rules are available here.
The 990 will not tell you exactly where the nonprofit’s money is coming from and going to, but it will give you a sense of how much money is flowing through the organization. The 990 breaks down income into general categories like “government contributions” and “direct public support.” Expenditures are divided into categories such as “program services,” “management,” and “fundraising.” A careful inspection of the 990 can show you whether an organization is spending an inordinate amount of money on fundraising or whether, as is alleged in the case of the Noos Foundation, income from government contracts far outstrips the cost of program services. This may be a clue that the organization is engaging in suspicious activities.