Terrific finale to Trib reporting on tuition tax credit/STO abuses

by David Safier
Yesterday, I wrote a post that mixed praise and criticism of the second part of the Trib's series, Rigged Privilege, about Arizona's poorly written and much abused tuition tax credit/STO legislation.

I mostly jumped the gun on my criticisms, and for that I apologize to the reporters, Ryan Gabrielson and Michelle Reese. The last 2 of the 6 articles, which appeared today, tie together threads I feared were going to be left hanging. I was concerned that both Steve Yarbrough and ChamBria Henderson, owners of two of the state's largest STOs and two of the most obvious violators of non profit tax laws, were granted more credibility in the excuses they were being allowed to give for their behavior than they deserved. It turns out, the reporters were allowing Yarbrough and Henderson to dig themselves deeper and deeper with their weak rationalizations, then lowering the boom in one of the final articles.

(I still maintain the article, Charity survived indictments to help poor, was confusing and arrived at a questionable conclusion, but had I read today's articles before I wrote that last post, I probably wouldn't have bothered making the criticism,since it isn't central to the thrust of the investigation.)

Having made my apologies, let me take a look at the last 2 articles.

The first, Some charities most generous to executives, is an extensively researched, damning indictment of the way  Rep. Steve Yarbrough runs his STO, Arizona Christian School Tuition Organization (ACSTO), for personal gain, and how ChamBria Henderson does the same with her STO, Arizona Scholarship Fund (ASF).

I've written at length about Yarbrough's many ways of taking personal profit from ACSTO, but the article digs deeper than I have and provides more detail. Yarbrough gets a salary as ACSTO's exec officer, then pays himself a retainer for legal services (even though he no longer has an Arizona law license), collects rent on the office space he owns, collects exorbitant data processing fees paid to a company he owns, and gets a fancy company car in the bargain. It's an IRS auditor's dream case. I guess people don't go to jail because of this kind of stuff, but they should face stiff fines at the very least and, in cases this blatantly corrupt, have their non profits shut down.

ChamBria Henderson's abuses of the system only vary from Yarbrough's in the details. Henderson has most of her family on salary at ASF. You have to read the way she used ASF money to buy office space — in her name, not the STO's — then collects higher than market value rent, and plans to have ASF pay off the remainder of the mortgage in 5 years. I can't begin to do justice to a story this rich in a few words.

Henderson just seems clueless, yet she and her family have been using the tax credit/STO system, which she had a big hand in creating, as their personal ATM machine for years. And Yarbrough, who is crafty, not clueless, has dug himself in so deep with his many ways to enrich himself that he may have crafted himself a special place in the annals of tax fraud.

Bad deeds such as these should not go unpunished. And the legislation should be cleaned up (or eliminated if I had any say in the matter) so similar misuse of funds won't continue.

The final article, Tax credit sponsor’s vision unrealized, sums up the whole series. I think it gives Trent Franks, who sponsored the original legislation and is now a U.S. Congressman, too much credit for trying to do the right thing with his legislation, but that's based on my deeply held belief that conservatives' mania for privatizing government has more to do with personal profit and self interest than with what's good for the state or the country. But that's a difference in interpretation, not a questioning of the facts.

My favorite quote in the entire series is by someone named Debra Pearson, who must believe in unicorns and the tooth fairy, because she seems to believe that people will do the right thing if they're given a worthy goal, a lot of money and no regulation.

Yes Virginia Debra, there is corruption in the world, and there's nothing like money and power to bring it out in people.That's why we have laws with regulations attached, or should have, to make sure that people don't act in ways that enrich themselves by harming others.