Sweetheart Deal

How does Virginia McGuire make a profit in the nonprofit business of creating affordable housing? Simple. She pays her husband.

As a general rule, the IRS wants nonprofit organizations to conduct business transactions at an "arm's length" distance from for-profit companies. To ensure that happens, the IRS tax form requires nonprofits to report their highest-paid contractors. It also requires nonprofits to answer "yes" or "no" to a series of questions designed to determine whether board members and/or key employees have any personal or corporate relationships with the for-profits with which they are doing business.

On her 2000 tax form for Green Bridge, McGuire made no mention of the fact that she paid her husband's company, Elsinore, $400,000 as part of her acquisition of Williams Run. In fact, in the section of the form asking her to report her top contractors, she reported "none." What is more, she answered "no" to the series of questions about whether she has conducted any business transactions with any relatives.

The questions about key employees would pertain to Mark Culwell, an officer of Elsinore, who appeared on Green Bridge's tax form as its president. McGuire, who says she has always been Green Bridge's president, says her accountant must have made a mistake when she listed Culwell as its top officer last year.

Virginia McGuire, whose tiny nonprofit is using government money to buy apartment complexes, says she can provide affordable housing and pay her husband's company hundreds of thousands of dollars, too.
Mark Graham
Virginia McGuire, whose tiny nonprofit is using government money to buy apartment complexes, says she can provide affordable housing and pay her husband's company hundreds of thousands of dollars, too.
Former tenants Hal Barker, left, and Ted Barker, standing outside the Williams Run apartments, say they felt compelled to dig into the details of the complex's sale. "They destroyed a marvelous community," Ted says.
Mark Graham
Former tenants Hal Barker, left, and Ted Barker, standing outside the Williams Run apartments, say they felt compelled to dig into the details of the complex's sale. "They destroyed a marvelous community," Ted says.

McGuire confirmed Culwell was on her board of directors but says he resigned before Green Bridge hired Elsinore. As evidence, she slides a copy of a one-page letter in which Culwell announced his resignation on May 22, 2000--the same day her board voted to hire Elsinore for the six-figure deal.

On this afternoon, McGuire says she cannot answer any other questions about the tax form and, instead, refers the Observer to her accountant, Karen Smelcer, for an explanation. Later, however, McGuire instructed the newspaper to leave Smelcer alone.

"Please do not call them again," wrote McGuire in response to the Observer's numerous efforts to contact Smelcer, who did not return phone calls or reply to faxes.

In a separate written response, McGuire argued that she had properly reported her business dealings with her husband to the IRS. "Scott McGuire's involvement was not a required disclosure on my 990 form even though he is my spouse, because he had no ownership interest in Elsinore," McGuire wrote.

The IRS questions, however, are not limited solely to corporate owners, according to IRS officials. In fact, they are written broadly to include any "officers, directors, trustees, majority owner or principal beneficiary." Scott McGuire, who declined to comment, has been an officer of Elsinore since 1998 and is currently a part-owner.

As a matter of policy, the IRS would not answer any specific questions about Green Bridge's tax forms nor would it confirm the Barkers' claim that the agency has initiated an investigation into Green Bridge. Phil Beasley, an IRS spokesman, did confirm that the IRS has received a complaint about the corporation.

"We do take these complaints very seriously, and we do follow up on them," Beasley says.

Back inside her Lakewood office, McGuire wondered whether she was being singled out for criticism because she happens to be Jim Wright's daughter.

"Does the Speaker's name have something to do with [this]?" McGuire bristled, referring to the Observer's interest in her company.

It is interesting that McGuire, like her father before her, is being asked to explain how a member of her immediate family is profiting from dealings in the public realm.

Jim Wright resigned in 1989 after the House ethics committee charged him with violating a series of House rules. Over Wright's denials, the committee prosecutor alleged that a Fort Worth real estate developer gave him gifts in the form of an $18,000 "sham" job for his wife, as well as the use of a condo and a car.

Like her father, McGuire says she has done nothing wrong. She says she can carry out her mission to help people on the low end of the income scale and hire her husband, too. "Does it make a difference that he's my husband?" McGuire says. "I certainly know who I'm working with. I know what his strengths are.

"Is there a conflict? I don't think so."

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