MIDDLE DISTRICT OF ALABAMA — The Justice Department obtained an 11-count wire and bank fraud indictment against the Southern Poverty Law Center in April, alleging the nonprofit defrauded donors and banks by using shell accounts to pay informants who belonged to hate groups. The indictment does not include any tax-related charges, despite prior scrutiny by IRS Criminal Investigation agents during the Trump administration.
Federal agents from IRS Criminal Investigation investigated the Southern Poverty Law Center’s paid informant program for possible tax crimes in 2019 and 2020. They focused on shell bank accounts opened by a former chief financial officer to pay individuals for intelligence about hate groups and sought to determine whether the organization unlawfully failed to file tax returns for those payments. IRS lawyers later cautioned against pursuing tax charges, citing a U.S. Treasury Department rule that exempts 501(c)(3) nonprofits from filing tax returns for payments to informants who provide information about potential criminal activity.
The tax-related probe began during President Trump’s first term as an extension of an FBI investigation launched in 2018 into whether the former chief financial officer may have embezzled money from the organization. Initially, the FBI treated the Southern Poverty Law Center as a potential victim. Agents interviewed informants and others paid through the program in 2020, but no charges were filed against the nonprofit or the former finance official, who retired several years ago. The case remained technically open into early 2021 but saw little activity during the Biden administration, and several senior Justice Department and IRS officials from that period were unaware of its existence until the indictment was made public.
The Southern Poverty Law Center has pleaded not guilty and filed a motion to dismiss, alleging vindictive prosecution. Its lawyers wrote that federal agents previously subpoenaed bank records and interviewed at least two informants and a former employee but did not seek charges at the time. When the case was reopened, prosecutors did not request documents or interview current employees before notifying the organization of their intent to indict.
Acting U.S. Attorney Kevin Davidson for the Middle District of Alabama told reporters in May there could be a superseding indictment. The Justice Department’s April press release credited IRS Criminal Investigation with assisting the FBI in the probe.