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David Brock's Media Matters Has Hidden $1,052,500 From The IRS Since 2010
12-14-2016, 07:57 PM,
David Brock's Media Matters Has Hidden $1,052,500 From The IRS Since 2010
David Brock's Media Matters Has Hidden $1,052,500 From The IRS Since 2010

<p><a href=""><em>Submitted by Andrew Kerr via,</em></a></p>
<li>Uncovered financial statements expose Media Matters.</li>
<li>The organization received&nbsp;$1,052,500 in sublet rental income from 2010 to 2014, but failed to report this income to the IRS.</li>
<li>Instead, key players pocketed this money for their own personal use.</li>
<p>David Brock, recently described by <a href="">Politico</a> as <strong><em>&ldquo;the Democrats&rsquo; dark-arts master,&rdquo; </em></strong>has some explaining to do.</p>
<p>His organization, Media Matters for America, has <strong>failed to report to the IRS over $1 million in sublet rental income from 2010 to 2014</strong>.</p>
<p>David Brock and his allies are most likely pocketing that money for themselves.</p>
<h4><span style="text-decoration: underline;">Media Matters shares office space with 13 separate organizations</span></h4>
<p>The 13 organizations are documented in a <a href="">previous report</a>.</p>
<p>Media Matters holds the lease to the 6th floor of 455 Massachusetts Avenue NW in Washington D.C, and the other organizations sublease space from Media Matters.</p>
<p>For example, here&rsquo;s a <a href="">rent payment American Bridge 21st Century made to Media Matters</a> in 2014.</p>
<p>There&rsquo;s nothing wrong with over a dozen organizations sharing office space, but there&rsquo;s a lot wrong with how Media Matters fails to report&nbsp;their sublet rental income to the IRS.</p>
<h4><u>Financial Statements for Media Matters</u></h4>
<p>Audited&nbsp;financial statements for Media Matters from 2007 to 2014 can be found in the Massachusetts non-profit <a href=";charities_sub_ctx=entry&amp;bod=1481631171">document search database</a>&nbsp;using the following credentials:</p>
<p><img alt="media-matters-massachusetts" class="aligncenter size-full wp-image-534" height="105" src="" width="502" /></p>
<p>In comparison to Media Matter&rsquo;s IRS form 990 annual returns, these financial statements provide&nbsp;<em>much</em> more insight into how Media Matters operates.</p>
<p>By comparing these two sets of documents, we discovered how David Brock and his allies are&nbsp;pocketing sublet rental income.</p>
<h4><u>Here&rsquo;s what&rsquo;s happening</u></h4>
<p>This report will focus on fiscal year 2014. Media Matters is claiming two separate values for occupancy expenses in 2014.</p>
<p>To the IRS, Media Matters is claiming:</p>
<li>Total occupancy expenses:&nbsp;<strong>$924,454</strong></li>
<li>Sublet rental income:&nbsp;<strong>$0</strong></li>
<p>In their financial statements, Media Matters is claiming:</p>
<li>Total occupancy expenses:&nbsp;<strong>$1,214,454</strong></li>
<li>Sublet rental income:&nbsp;<strong>$290,000</strong></li>
<h4><u>Here&rsquo;s how</u></h4>
<p>Media Matters <a href="">reported to the IRS</a> in 2014 that their &nbsp;occupancy expenses were&nbsp;$924,454.</p>
<p><img alt="media-matters-2014-occupancy" class="aligncenter size-full wp-image-537" height="21" src="" width="363" /></p>
<p><a href="">IRS instructions</a>&nbsp;state &ldquo;<strong>Do not net any rental income received from leasing or subletting rented space</strong> against the amount reported on line 16 for occupancy expenses.&rdquo;</p>
<p>However, Media Matters&rsquo; 2014 financial statements show that the reported occupancy expenses of $924,454&nbsp;<strong><em>includ</em></strong><em><strong>es&nbsp;</strong></em>net of sublease income of approximately $290,000.</p>
<p><img alt="net-of-sublease-income-2014" class="aligncenter size-full wp-image-538" height="69" src="" width="745" /></p>
<p>This means&nbsp;that Media Matters broke IRS guidelines.</p>
<p>Already, this uncovers a&nbsp;massive discrepancy.</p>
<li>Media Matters claimed to the IRS in 2014 that their total occupancy expenses in 2014 were&nbsp;<strong>$924,454.</strong></li>
<li>Media Matters claimed in their 2014 financial statements that their total occupancy expenses were&nbsp;<strong>$1,214,454.</strong></li>
<p>Only one of these can be&nbsp;true.</p>
<h4><u>What happened to the $290,000 in sublet rent income?</u></h4>
<p>Well, Media Matters didn&rsquo;t report any sublet rental income to the IRS in 2014.</p>
<p>The IRS provides <a href="">two options</a> in regard to reporting sublet rental income.</p>
<li>Report sublet rental income as program-service revenue, or</li>
<li>Report rental income as gross rents.</li>
<p>As we can see below, Media Matters reported $0 in both fields in their <a>2014 IRS form 990</a>.</p>
<p><img alt="media-matters-reported-rental-income" class="aligncenter size-full wp-image-544" height="304" src="" width="448" /></p>
<h4><u>How much did Media Matters really pay for occupancy?</u></h4>
<p>This is the most likely scenario:</p>
<li>Media Matters total occupancy expenses for 2014 were&nbsp;<strong>$924,454.</strong></li>
<li>David Brock and allies pocketed the&nbsp;<strong>$290,000&nbsp;</strong>in sublet rental income for personal use.</li>
<p>Why is this the most likely scenario?</p>
<p><strong>$1,214,454&nbsp;</strong>is an unrealistic amount for occupancy expenses in the building Media Matters operates out of.</p>
<p>455 Massachusetts Avenue NW is a 12 floor, <a href="">242,366 square feet</a> office building. &nbsp;This amounts to an average of 20,197 square feet per floor.</p>
<p>General Services Administration, a government organization, signed a <a href="">10 year lease</a> in 2009 for the entire <em>5th floor</em> of 455 Massachusetts avenue (22,432 square feet).</p>
<p>GSA&rsquo;s lease for the 5th floor is&nbsp;<strong>$942,021&nbsp;</strong>per year. The lease agreement makes no mention of an escalation clause, and <strong>includes</strong> operating expenses and real estate taxes.</p>
<hr />
<p>Also in 2009, Media Matters signed a 10 year lease for the entire <em>6th floor</em> of 455 Massachusetts Avenue NW.&nbsp;However, they claim to spend a lot more in rent than GSA.</p>
<p>Furthermore, Media Matters specifies that&nbsp;this amount&nbsp;<strong>does not<em>&nbsp;</em></strong>include operating expenses and real estate taxes.</p>
<p><img alt="media-matters-operating-lease" class="aligncenter size-full wp-image-552" height="147" src="" width="902" /></p>
<p><img alt="media-matters-future-payments-2010" class="aligncenter size-full wp-image-558" height="256" src="" width="762" /></p>
<h4><u>Media Matters is paying a lot more than GSA for rent, despite the fact they operate in the same building and lease the same amount of floor space</u></h4>
<p>It just doesn&rsquo;t make sense. Media Matters pays over <strong>$270,000</strong>&nbsp;<strong>more&nbsp;</strong>than GSA, despite the fact&nbsp;that both organizations own the same amount of floor space, and Media Matters&rsquo; lease&nbsp;<strong>doesn&rsquo;t&nbsp;</strong>include operating expenses and real estate taxes.</p>
<p>Media Matters is paying&nbsp;<em>so much more</em>, yet getting <em>so much less</em> than GSA.</p>
<p>It doesn&rsquo;t add up.</p>
<p>Unless Media Matters can produce a&nbsp;lease agreement for our review, it&rsquo;s safe to assume that&nbsp;their lease is comparable to GSA&rsquo;s at around&nbsp;<strong>$924,000&nbsp;</strong>per year.</p>
<h4><u>What is Media Matters doing with the sublet rent income?</u></h4>
<p>It appears that Media Matters is being truthful to the IRS when it claims it&rsquo;s 2014 occupancy expenses were&nbsp;<strong>$924,454.</strong></p>
<p>But Media Matters is lying&nbsp;to the IRS when they claim to collect&nbsp;<strong>$0</strong> in sublet rent income in 2014.</p>
<p>Make no mistake, Media Matters is receiving rental payments. Here&rsquo;s a <a href="">rent payment from American Bridge 21st Century to Media Matters</a> in 2014.</p>
<p>Media Matters is artificially increasing occupancy expenses&nbsp;in it&rsquo;s financial statements, then &lsquo;buying down&rsquo; by netting sublet rent income.</p>
<p>But IRS instructions prohibit organizations from &lsquo;buying down&rsquo; occupancy expenses by netting sublet rent income.</p>
<p>The truth is,&nbsp;<strong>David Brock and his allies are most likely pocketing the sublet rent income for their own personal use.</strong></p>
<h4><u>How much has David Brock&nbsp;and his allies pocketed through this scheme?</u></h4>
<p>Every year since 2010, Media Matters has reported $0 to the IRS in sublet rent income.</p>
<p>But Media Matters reports a significant amount of sublet rent income in their&nbsp;financial statements:</p>
<p>Total:&nbsp;<strong>$1,052,500&nbsp;</strong>in sublet rent income hidden from the IRS.</p>
<p>See for yourself&nbsp;by comparing Media Matters&rsquo; <a href=";EIN=470928008&amp;BMF=1&amp;Cobrandid=0&amp;Syndicate=No">IRS form 990s</a> and their financial statements found in Massachusetts non-profit <a href=";charities_sub_ctx=entry&amp;bod=1481631171">document search database</a>.</p>
<h4><u>How do we know for sure Media Matters is being dishonest in its IRS form 990s?</u></h4>
<p>American Bridge 21st Century <a href="">sublet office space</a> from the American College of Preventative Medicine in early 2014.</p>
<p>The ACPM operates out of the 2nd floor of 455 Massachusetts Avenue NW, and collected $8,920 in sublet rent payments from American Bridge in 2014.</p>
<p><img alt="american-college-rent-payment" class="aligncenter size-full wp-image-561" height="301" src="" width="743" /></p>
<p>In it&rsquo;s <a href="">2014 IRS form 990</a>, the ACPM demonstrates how to correctly report sublet rental income:</p>
<p><img alt="correct-sublet-income-reporting" class="aligncenter size-full wp-image-562" height="107" src="" width="458" /></p>
<p>This&nbsp;is the final nail in the coffin for Media Matters. They have no wiggle room left. It should be clear now that Media Matters is lying to the IRS by failing to report sublet rent income.</p>
<h4><u>Birds of a feather flock together</u></h4>
<li>From 2010 to 2014, financial statements show that Media Matters received&nbsp;<strong>$1,052,500&nbsp;</strong>in sublet rental income from related organizations.</li>
<li>From 2010 to 2014, Media Matters reported&nbsp;<strong>$0 </strong>in sublet rental income&nbsp;to the IRS in their annual form 990s.</li>
<li>Media Matters has hidden over $1 million of income from the IRS since 2010.</li>
<p>This situation is strikingly similar to how Al Capone was <a href="">convicted of income tax evasion</a>.</p>
<p>Al Capone was hiding income from the IRS. Media Matters is hiding income from the IRS.</p>
<p>It&rsquo;s that simple.</p>
<h4><u>What&rsquo;s next?</u></h4>
<p>Please share this report, and consider signing <a href="">our petition</a>&nbsp;to the Department of Justice to investigate&nbsp;David Brock&rsquo;s Media Matters for America.</p>
<p><em>We&rsquo;ve barely scratched the surface with this report &ndash;&nbsp;</em>The Citizens Audit will continue to expose findings from Media Matters&rsquo; financial statements.</p>
<p><u><strong>When we are finished documenting all our findings, we will draft and submit official complaints to the IRS, the Federal Election Commission, and the Department of Justice in hopes to force an investigation into David Brock and his organizations.</strong></u></p>

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