A non-profit company set up by the Mobile Housing Board has never filed any of the annual financial disclosure forms required by law during its 10 years of existence, according to its director, and is refusing to release information that would already be public had those forms been filed.

Mobile Development Enterprises was formed in 2003, according to both state and county records, as a tax-exempt company. It appears they first filed for tax-exempt status three years later and would have been required to file a 990 Form with the IRS each year since detailing financial information and answering questions about the structure of the organization. MDE lost its tax-exempt status in May 2010, however, for not filing its 990s for three consecutive years. It turns out that most basic requirement was never met.

“It seems that no Form 990 was filed prior to the date of the auto-revocation,” MDE Executive Director Dwayne Vaughn said last week.

Vaughn has said MDE was told by the IRS it did not need to file annual 990 forms, but neither MDE nor the Housing Board have letters from the IRS verifying that. He said MDE sent a form to the IRS along with a check for $100 and that check was cashed, which he says serves as the only record of evidence MDE was ever exempted from the filing rules.

Vaughn says MDE has completed a few years’ worth of 990s, but refused Lagniappe’s request for copies of them, saying he wants to wait until an attempt at getting its tax-exempt status is successful before releasing such information. MDE submitted an application for reinstatement in August 2011, according to Vaughn, and is expecting an answer back from the IRS “soon.” According to IRS officials, the 1023 Form used for making application for tax-exempt status is not public record while it is being considered, however, Lagniappe has been unable to verify that any accompanying 990s would also be off limits, and the IRS will not verify whether an application by MDE is currently being considered or when it was submitted.

“At the request of the IRS specialist reviewing MDE’s requested reinstatement, Form 990s were submitted recently with respect to the pending Form 1023 application for reinstatement of the Tax Exempt status. We are awaiting word from the IRS whether the Forms submitted will be accepted as ‘filed’ forms or whether additional modifications will be requested. We hope to hear from the IRS very shortly with respect to its position on our submittals. If and when the Forms are accepted as filed by the IRS, MDE will comply with pertinent regulations and provide disclosure, upon request,” Vaughn said.

MDE has also had other issues besides those involving the 990 forms. A HUD review in 2011 found MDE ineligible to perform services it was rendering at the time, due to a lack of documentation. A June 2011 On-site Monitoring Review by HUD found, “The Mobile Development Enterprises activity was classified as an economic development activity, but there was no documentation showing assistance was provided to for-profit businesses. Job placement alone does not qualify. This activity was determined to be ineligible.”

Specifically, MDE was supposed to offer a minimum of two $10,000 loans to small low- and moderate-income eligible businesses, and was also supposed to provide job readiness training for a minimum of 10 low-and moderate-income individuals. HUD determined that verifying documents were not in MDE’s files and staffers indicated that loans were not given to businesses.

Efforts to contact Vaughn about MDE’s response to HUD’s 2011 findings were not successful prior to press time.

As for when MDE might have its tax-exempt status restored, thus allowing public access to its 990 submissions, is unclear at this time. Vaughn has claimed that while MDE’s tax-exempt status was revoked in May 2010, he and the Housing Board were not made aware until 14 months later when it was publicly posted online. This delay kept him from reapplying for the exemption until August 2011.

Allison Black Cornelius of Blackfish, a governance consulting firm in Birmingham that deals with many non-profits, said it would be highly unlikely the IRS waited 14 months to notify MDE of the revocation. She said the IRS immediately informs non-profits of a revocation and also begins posting it online within a couple of months as well. She said the IRS spent the years between 2008 and 2010 informing nonprofits old rules regarding 990 filings were gone and revocations would be coming.

The issues regarding MDE have led HUD to look into the relationship between the Housing Board and MDE.

“We are analyzing whether the Mobile Housing Board appropriately contracted with MDE utilizing federal funds provided by HUD and, if so, what procurement rules would have applied to their use, and also whether such applicable requirements were followed,” Gloria Shanahan of HUD’s Office of Public Affairs said. She said the process would take “some time,” but that the findings will be public.

Shanahan said HUD provided the Housing Board with nearly $43 million in funding last year, not counting any Community Development Block Grant funds she said the city has allocated to MHB for public service activities. Handling of CDBG funds was taken over by the city in 2010 after a HUD audit revealed the Housing Board improperly spent $340,000 and that the city was not properly overseeing their uses of the money.

Of the myriad questions a non-profit organization must answer when filling out its Form 990, several deal with the closeness of other entities, employees and officers to the company. This would be particularly interesting for MDE as it is not only owned by the Housing Board, but the two share an executive director and a chairman and vice-chairman of the board. Vaughn oversees day-to-day operations of both MDE and the Housing Board, while Clarence Ball and Donald Langham are chairman and vice-chairman for both organizations.

MDE also is located inside Housing Board offices and even uses Housing Board phone lines. Yet Vaughn says the two are completely separate. Housing Board employees still fall under the auspices of the Mobile Personnel Board and are hired using the merit system, while MDE employees are not governed by the Personnel Board.