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Old 08-10-2004   #1
bethabernathy
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SEMPO & Non-Profit Legal Issues

8/10/04 – Today I spoke with Dana Todd, Christine Churchill and Ian Mckinon (sp). Ian is acting in an advisory legal capacity for Sempo. At one time he was an Intellectual Property Attorney. He is now providing SEO services.

My main focus, related to the call, was if Sempo was aware of the IRS’s rules related to member and sponsor advertising. They said they look at this similar to a membership directory. I asked them if they had plans to hire a Non-Profit Attorney to review this issue and issues related to membership structure, stipend caps and whether or not there is a conflict of interest related to Barbara Coll operating as a member of the board, President and Executive Director.

They said they do have plans to get several professional legal opinions together, but they could not commit to a timeline to when they will get this coordinated.

I offered to assist them in this regard and they were hesitant as they are concerned that I would make all findings available via the internet. I told them that I would not make the legal investigation public, but that if the findings required them to make changes to their organization they would have to be held accountable and make those changes whether they liked the findings or not. The changes would be able to be seen by simply going to their website.

I pointed out to them that if they didn’t have the time to get a legal opinion together that they will most likely be audited by the IRS, so that time is of the essence in this regard. I told them that I could get this taken care of within 10 days. They indicated that they all run prominent businesses and again cannot commit to a timeframe to obtaining a legal opinion. I told them that if they would like me to help to please get back to me one way or another within 72 hours. They agreed that they would do this.

I said that going forward, it would be prudent not to include their personal businesses in their advertising. They said they would look into this to see if they were in any sort of violation.

I also told them that another option would be to re-organize as a For Profit Corporation. In doing this, I indicated that they would need to see how that would affect them looking back.

So, we will see if they want my help or not. I would assume we will see changes made if they are required by law, short of any loop holes.
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Old 08-10-2004   #2
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In other words, pooey on you. They can simply read at the IRS if they need confirmation that a 501c non-profit should NOT be promoting it's own members.

And why would there be anything to look at or think about with this issue of the promotion of members? Can't they understand the great majority of SEM people do NOT agree with their organization and how it's run? Funny about that; about two months since it's inception, there were about 100 members in total. 13 months after that and there are still less than 300 members. Not a good record considering there are hundreds and hundreds of sem firms on the planet. Maybe thousands.

Goodness, do they need a wet noodle aside their noggins?
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Old 08-11-2004   #3
bethabernathy
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Post Clarification

Related to my post about Sempo members not being allowed to post in forums, Dana Todd contacted me to clarify as follows "what I stated was that a member of the Board is not authorized to address legal matters in a public third-party forum."
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Old 08-11-2004   #4
steve sardell
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Quote:
quote from Beth Abernathy
They indicated that they all run prominent businesses and again cannot commit to a timeframe to obtaining a legal opinion
Getting a U.S. legal opinion as to whether SEMpo qualifies as a NFP or NP, , should have been a high priority during the start up phase. Surely there was an opinion sought on the initial business model. It appears, however, the initial mission has been distorted.

Seeking a revisited opinion does not require a great expense nor does it require a great deal of time or effort. It would be prudent the CEO immediately get a legal verification. It would be a well spent $500, if only precautionary.
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Old 08-11-2004   #5
bethabernathy
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Well their whole operation is at stake, so they must figure why bother? They are going to have to repay members, etc. I have found a lawyer up here that will assist at $200 per hour and has non-profit experience.
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Old 08-11-2004   #6
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I hate to say this but their attitude does not surprise me. After the meeting at SES I had the chance to talk with several of the board members. Not about anything in particular but to introduce myself and volunteer some of my time in any way that they might need.

I was brushed off with barely any acknowledgement. That's fine but does indicate to me how much they honestly care about their members and the organization.

I wish you luck Beth and if you need any assistance just let me know.
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Old 08-12-2004   #7
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Excess Benefit Transactions under IRS 4958

This IRS document discusses "Automatic" Excess Benefit Transactions under IRS 4958.

http://www.irs.gov/pub/irs-tege/eotopice04.pdf
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Old 08-12-2004   #8
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Sempo: The Stipend

"Another significant fact that will help demonstrate that a tax-exempt ... organization promotes the ... community as a whole, rather than private interests, is that the board of trustees and all committees with board-delegated powers require that, as part of their systems of controls, all tax-exempt organizations ... conduct periodic reviews of their activities to ensure that the organizations are operating in a manner consistent with accomplishing their charitable purposes and that their operations do not result in private inurement or impermissable benefit to private interests. Issues of special concern are:

A. Whether compensation arrangements and benefits are reasonable and are the result of arm's length negotiations..."

http://www.irs.gov/pub/irs-tege/topic-c.pdf

Page 7
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Old 08-12-2004   #9
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Hi, everyone. With all these focused threads, not sure if this is the right place to post. If not, my apologies in advance.

Rather than going over old findings, or making new statements I have decided to ask just questions. I need some data gathering. So any help will be very much appreciated.

1. What is SEMPO's legal status?

On Wed Mar 24, 2004 12:35 am in this forum
http://www.cre8asiteforums.com/viewt...4f311 5fdb564

Barbara Coll states

"SEMPO is a non-profit 501(c)3 organization. The Board of Directors have received no financial compensation for their volunteer position on the board of SEMPO." Barbara C. Coll; CEO, WebMama.com Inc.; President & Chairperson of the Board, SEMPO Inc.


Now the SEMPO site states the following
http://www.sempo.org/faq.php#legal

"SEMPO is a non-profit, tax-exempt organization; Federal Tax ID #14-1891138. The organization is a 501(c)(6) chartered in the state of Delaware."

Thus, after publicly stating they are a 501(c)3 now they state are a 501(c)(6).

The difference? According to the IRS site (http://www.irs.gov/charities/business/index.html)
501(c)(6) is for Business League Orgs
501(c)(3) is for Charitable Orgs
Note: Click on the left column links of above IRS page to find out the corresponding status.
So essentially my questions are: For how long they have been claiming 501(c)(3) status? When the change, if any, took place and why? I'm just curious.

2. What is SEMPO's mailing and physical address? For mailing address the site states

SEMPO ,Inc.
665 Lytton Ave,
Palo Alto,CA 94301

WebMama site http://www.webmama.com/contact.htm shows that

WebMama Office Address
665 Lytton Avenue
Palo Alto, CA 94301

Why make the mailing address of a non profit the same as a for profit site? What is the physical address of the non profit organization as stated in the filings?

Any information regarding 1 and 2 is greately appreciated. Thanks.

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Old 08-12-2004   #10
bethabernathy
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Hi Orion - I can probably get the answer related to their filing status tomorrow a.m. from the State of Delaware and will get back to you.
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Old 08-12-2004   #11
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Well, I'll be quite honest about it. I've never been nor ever will be a supporter of SEMPO, and all I can say is, "get your tap shoes on SEMPO", because you have some serious tap dancing ahead of you to get yourselves out of this one.

I am absolutely disgusted that a non-profit organisation that has taken hundreds of thousands of dollars in monies has not sort legal advice for the proprietary of initial business setup. You have to be kidding me, honestly. Someone is getting a fatter pocket, which is about to be lightened by the authorities and quite frankly, wouldn't bother myself it if some jail time come from it also. I would only say that it is deserved for constructing a non-profit organisation with no legal standing.

I guess this is why many of these business behind something like SEMPO go broke, as they most likely haven't received legal advice for those either. Someone, or several; need to go back to business school by the sounds of it.

My 2 cents.

Last edited by Anthony Parsons : 08-12-2004 at 09:42 PM.
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Old 08-13-2004   #12
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Hi There - Sempo filed for incorporation with the State of Delaware on 4/3/03. Their application for Tax Exemption as a 501(c)(6) was approved by the IRS in 4/04. As far as I can tell B. Coll must not have known the Corporation's status or where they were chartered i.e. California or Delaware.
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Old 08-13-2004   #13
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Could a religious association affect their 501(c)(6) status?
Is there any association between SEMPO and Scientology?
Can someone shed some light on what is claimed below? Just asking questions. Not making any statement or accusation in any way or matter.


According to the apologeticsindex.org site
http://www.apologeticsindex.org/n/n13.html


In addition to the apparent association, there is a sort of "pr lines jacking" story to add.

The pr in question, signed by Georgina Tweedie, is at
http://www.pressbox.co.uk/Detailed/16573.html

and reads

"Assisted by the Church of Scientology International this new group will help non-profits gain exposure for the causes they serve."


The broken link mentioned by the apologeticsindex site appears to be moved to

http://www.sempo.org/editorials/nonprofit-sem.php

and the line in question in this SEMPO link now reads

"This new group will help non-profits gain exposure for the causes they serve."

This SEMPO article was Written by Georgina Tweedie and has a link pointing to The Church of Scientology.


This SEMPO link http://www.sempo.org/about-sempo.php interestingly starts as follow:

"The Search Engine Marketing Professional Organization (SEMPO) was formed to help spread the good news about search engine marketing (SEM)." and is signed by B. Coll.


The link that lead me to the above sequence of event is this one.


http://www.google.com/groups?q=sempo...x.co m&rnum=1



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Old 08-13-2004   #14
bethabernathy
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The deal is that a 501(c)(6) is much more loosely governed by the IRS than a 501(c)(3). The IRS looks to the membership to monitor a 501(c)(6).

The membership advertising and the dual advertising in their PR is their main and very large problem. This is where they are jeopardizing their exemption status. The following Federal Tax law is specific to a 501(c)(6):

See: http://www.irs.gov/irm/part7/ch10s09.html

-------------------------

"7.25.6.7.1 (10-19-1998)
Advertising Activities
Advertising that carries the names of members generally constitutes the performance of particular services for members. Thus, an association of the merchants in a particular shopping center whose advertising material contained the names of the individual merchants is denied exemption (see Rev. Rul. 64–315, 1964–2 C.B. 147) as is an association created to attract tourists to a local area, but whose principal activity is the publication of a yearbook consisting largely of paid advertisements by its members (see Rev. Rul. 65–14, 1965–1 C.B. 236). In another case, exemption was denied an association that published catalogues that listed only products manufactured by the members. See Automotive Electric Association v. Commissioner, 168 F.2d 366 (6th Cir. 1948)."
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Old 08-13-2004   #15
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Really now; What the heck is going on here?

http://www.apologeticsindex.org/n/n13.html

Is this how SEMPO is claiming non-profit status? Are they or board members also members of the Church of Scientology?

Yes. I'm asking the questions also and I would like an answer as to why all these religious type websites are also promoting SEMPO, and that SEMPO is somehow a saviour to the non-profit communities.

This is a paragraph in those press releases:

Quote:
The Search Engine Marketing Professionals Organization (SEMPO) is one such non-profit organization promoting and providing search marketing services. Run by professional leaders in the industry, they invest their personal time into something they believe in.

Recently representatives from well-known and respected non-profit organizations such as the Salvation Army, United Way, and World Vision were interviewed. Despite mixed levels of experience with SEO, most stated that they do care about exposure on the Net. Some confessed to spending money with an SEO company to help them.

Few SEO companies seem to provide discounts for worthwhile causes. An unwary novice stepping into the shark infested waters of SEO can be in for surprises and unexpected costs, as many will attest.

When this occurs for non-profits, charities in particular, it defeats the purpose. A specific example cited is the Salvation Army which only has a budget of 4 cents per dollar allocated to marketing. Their funds are reinvested into disaster relief and help for the underprivileged. The general consensus is that this is where most of their funds should be expended, and should not be spent on a marketing budget. This is a point that could be argued; however, another school of thought has surfaced.
Members of a newly formed group, Non-Profits in Search, note that search engine marketing issues for non-profits have employed time, money and energy competing with the business world. Further they agree that the non-profits' "competition" should be limited to other organizations within this sector.

With this in mind, Non-Profits in Search has been launched; its mission is to help non-profits improve their search engine visibility, while also improving relevancy and the quality of informational search results.

Assisted by the Church of Scientology International this new group will help non-profits gain exposure for the causes they serve.
What is this? Is "Non-Profits in Search" also SEMPO? Do they have a partnership with the church of scientology? And is this the non-profit connection for non-profit tax status?

The first paragraph above also claims SEMPO "provides search engine marketing services". Do they really? So now we all have to compete with the non-profit organization and helping client's with SEM?
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Old 08-13-2004   #16
bethabernathy
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In reading that they are providing SEM services, that is another ding i.e.:

http://www.irs.gov/irm/part7/ch10s09.html

7.25.6.1.2 (10-19-1998)
Basic Tests

E. Its activities must be directed to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons.

---------------

Although when I receive all their paper work we'll be able to get to the bottom of it.

Last edited by bethabernathy : 08-13-2004 at 07:36 PM.
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Old 08-13-2004   #17
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Aside the obvious connection to 501(c)(6) violations, let revisit the Scientology side and the "pr line jacking" issue.

The original article is more enlightening.

According to this Google cache link http://64.233.161.104/search?q=cache...hl=en&ie=UTF-8

Georgina Tweedie's original article/link was from 7/26/04
The original url was http://www.sempo.org/articles/nonprofit-sem.php and was removed.

We found a cache copy of the original article. Here is

http://216.239.39.104/search?q=cache...hl=en&ie=UTF-8

As the apologeticsindex.org site states, it clearly reads

"Assisted by the Search Engine Marketing Professionals Organization (SEMPO), this new group will help non-profits gain exposure for the causes they serve."

The apologeticsindex.org site points out the following and I quote:

"The press release quoted above was first posted - as an article - on July 26, 2004 at the SEMPO website, albeit with two small differences from the version released at pressbox.co.uk:...

"Assisted by the Church of Scientology International this new group will help non-profits gain exposure for the causes they serve."

which is how reads now in this pr http://www.pressbox.co.uk/Detailed/16573.html

Now, the original SEMPO article was moved to http://www.sempo.org/editorials/nonprofit-sem.php

and now the line in question reads

"This new group will help non-profits gain exposure for the causes they serve."

Here is the deal. Compare line by line the Google cache copy, the revised SEMPO copy and the pr of Georgina Tweedie and draw your own conclusions.

Evidently, the line above was under scrutinity and editing...but why? Now that the Church of Scientology emerges in the scene, how SEMPO members will look at the whole SEMPO thing? Just a question.

One more thing...Who is Georgina Tweedie? I don't know.

However, according to this link

http://www.lisamcpherson.org/cos/coscorps.htm and to this link http://buttersquash.net/archives/000033.php there is a Georgina Tweedie listed behind RTC Australia Inc., one of Scientology's Corporations and Organizations.


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Old 08-13-2004   #18
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Very interesting. I get your drift. Wonder how those sponsers will look upon the relationship????
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Old 08-14-2004   #19
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Well Orion, you just keep justifying my post and thoughts on the organisation. SEMPO is making money, hiding dealings, changing statements, invoked with who knows behind the scenes, and all the time still bleating about how they need more members. What for? I guess to pay there fee's, being not for profit and all. I don't see the salvation army taking any sort of huge payment or fee's for running the organisation. I believe there head people are actually one of the lowest paid in the world for the size of an organisation run. Interesting. I have had a little to do with the salvation army over the last 10 years now, and never seen any of them getting these sort of fat cat payments like Barbara Coll!

I think SEMPO need to have their license revoked, refund all memberships to those that have paid, and stop further corrupting an organisation that is already profound by corruption, deceipt and dishonesty. They aren't doing the SEO / SEM industry any favours by naming themselves up the top of the food chain at present. They are just as dishonest as those unethical types taking peoples money for shotty SEO / SEM services provided. Go figure huh?

Hell, I will just throw all my cents into this one. Good on ya SEMPO! Bleat about the industry corruption, and you're leading the pact. Yeh!
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Old 08-14-2004   #20
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Danny Sullivan is the "only" one to stop this.

Danny; You must call on SEMPO to give up it's non-profit status immediately. They must stop functioning right now. They must completely get rid of all board members, etc, and quit all business. In other words, close up shop for now.

Rebuild with a new site, concept, new Corporate Name, new irs status, and refund all monies to all members. At least refund all sponsor monies.

It's too far out of hand now.

Something easy that should have been done over one week ago, and would take about one second to do:

http://www.sempo.org/about-sempo.php

That link is "STILL" there.

Danny; What does all of this tell you? Please put your foot down. It's the only right thing to do at this time.
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