CRIME

East Cleveland’s FOP didn’t file 990 tax returns for 10 years

Detective who led city union was twice convicted as a tax cheat and could now face additional charges for violating state union laws

EAST CLEVELAND, OH – The twice-convicted police captain leading East Cleveland’s detective bureau may soon find himself facing new criminal charges after Ohio’s State Employee Relations Board (SERB) investigates why Fraternal Order of Police (FOP) Lodge #39 is still in existence. 

The Internal Revenue Service (IRS) automatically revoked FOP Lodge #39’s tax-exempt status in 2013 after its president, Captain Scott Gardner, failed to file required 990 tax returns in 2010, 2011 and 2012. 

The last 990 was filed for 2009.  EJBNEWS has learned no 990’s were filed between 2010 and 2018.  For the past 10 years Gardner and other Lodge #39 officials have been receiving dues from the wages paid to East Cleveland cops  without reporting what they’ve done with the money to the IRS.  

Cuyahoga County Prosecutor Michael O’Malley indicted Scott Gardner on January 29, 2014 for failing to report over $22,000 in earnings and for failing to collect withholding taxes from security company employees.

Gardner and other FOP Lodge #39 officials were required each year after the automatic IRS revocation to file an annual report to the SERB letting the state agency knowif the “tax exempt organization” complied with all laws.  The report is due within 5 months and 15 days after the end of the fiscal year.   EJBNEWS has reached out to SERB to learn if the reports were filed and why it was allowed to exist and collect public funds as dues as a revoked tax-exempt organization.

The most recent collective bargaining agreement between the FOP “gold” or Lodge #39 and the city is dated April 14, 2015.   It’s signed by “Gary A. Norton” as the mayor and expired on June 31, 2017.  The agreement appears to be “unexecuted” as it does not bear the signatures of contract lawyer Willa Hemmons or Gardner as Lodge #39’s official representative.  There is no companion legislation attached to the agreement which shows it was approved by East Cleveland city council.  It is signed on the FOP side by an official of the national organization, not Lodge #39, who has no authority to bind East Cleveland to the agreement.

Prior to the April 2015 contract Gardner was indicted by two separate Ohio county prosecutors for violating the state’s tax laws.

Captain Scott Gardner was appointed to lead East Cleveland’s detective bureau after he pled guilty twice for failing to file and pay taxes.

On November 21, 2013 the tax cheating detective was indicted by the Medina county prosecutor for trafficking in tobacco products to avoid paying taxes.  He pled guilty.

Approximately two months later on January 29, 2014 Gardner was indicted by Cuyahoga County Prosecutor Michael O’Malley for failing to pay taxes on over $22,000.  He was charged for failing to file tax returns between 2011 and 2013.  He pled guilty.  In April 2011 Ohio’s Secretary of State cancelled Gardner’s Non-Plus Ultra Investments, Inc. for not filing and paying taxes.

Gardner’s latest tax law violations could present other problems for him with SERB because the state agency recognized Lodge #39 as an employee collective bargaining unit based on the truthfulness of the information union officials filed in their annual report.   

East Cleveland’s mayor between 2006 and 2009 suspended Scott Gardner twice for insubordination and refused to promote him to sergeant. Gardner had written bad checks to security company employees. The former mayor wanted him fired. After 2009 Gardner was promoted to sergeant and later charged with two other detectives for stealing evidence from drug dealers. The letter above shows the plea agreement he signed to avoid a trial for being a tax cheater.

The state’s involvement in the 2015 through 2017 agreement with the “revoked” FOP lodge is evidence SERB officials believed they were interacting with a legitimate and legal employee organization.

Gardner and other union officials should have informed SERB that Lodge #39’s tax-exempt status was revoked; and the union was no longer authorized to collect dues or negotiate as a “recognized” and official collective bargaining unit. 

The essence of Lodge #39’s IRS tax-exempt revocation created a reality for East Cleveland cops that they have no union.  The city in 2015 had no legal obligation to negotiate or enter an agreement with FOP Lodge #39.  All the money collected for dues should be returned.

IRS penalties for non-filing tax-exempt organizations that do so without cause are severe.  Information from the IRS website explains that organizations with gross receipts of less than $1,020,000 for its tax year will have a penalty of $20/day for each day that the return is late. The maximum penalty is $10,000 or 5 percent of the organization’s gross receipts, whichever is less.

Organizations with gross receiptsof more than $1,020,000 are penalized up to $100/day for up to a maximum of $51,000. 

The penalties against Gardner and other FOP officers who failed to file are $10 a day for a total of about $5000 per non-filed return.

Eric Jonathan Brewer
Author, Investigative Journalist, Speaker, Politician, Consultant

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