By Nicholas Kusnetz, Center for Public Integrity
Who is funding Team ACA, the secretive nonprofit that has supplemented Arizona’s economic development agency with private money? The answer has proven elusive.
Ever since August 2011, when Jan Brewer announced the creation of Team ACA, an “investment” and fundraising arm of the Arizona Commerce Authority, the organization has been hard to pin down. Over the following year, reports by Arizona newspapers teased out some details of Team ACA’s finances, suggesting that it had raised either $300,000 per year, as Chairman Jerry Colangelo said in January 2012, or $200,000, as CEO Don Cardon said later that year.
Cardon told reporters the money came from Alliance Bank of Arizona, a major regional bank, and Apollo Group, which runs the for-profit University of Phoenix. Executives at each of those companies, along with Cardon, Colangelo and a Phoenix lawyer, comprised Team ACA’s board. Cardon also said a spot was reserved for someone from JP Morgan Chase, which had made a verbal commitment to contribute. A published report said Team ACA had paid for a staff retreat, a holiday party and other expenses, totaling $191,912.
But despite the fact that Team ACA’s funds were devoted almost entirely to paying expenses for a quasi-public agency, there was no way to verify how much money the group was raising and spending. In September 2012, the Phoenix Business Journal tried unsuccessfully to obtain a copy of the group’s federal tax return, which would answer that question. And finding that tax return hasn’t gotten any easier since.
Team ACA has no website. It has no phone number. Until earlier this month, the federal tax return, which all nonprofits must submit to the IRS, was not published on either of the main third-party websites that generally post that information. The Center filed a records request with the IRS asking for the form, only to be told that it “isn’t open to public inspection.” That’s most likely because the IRS has not yet registered the document in its system: due to filing laws and bureaucracy, it can take more than two years to register a nonprofit’s first tax return.
The Center also tried contacting Team ACA’s directors. Team ACA’s corporate filings with the Arizona Corporation Commission originally listed five directors: Don Cardon, Jerry Colangelo, Ed Zito, of Alliance Bank, Joe D’Amico, of Apollo Group, and Bradley Vynalek, a lawyer with Quarles and Brady. Colangelo declined to comment. Ray Artigue, a spokesman for Don Cardon, said Cardon was no longer involved with Team ACA and referred questions to the new CEO, though he did not say who that was (and the Corporation Commission still listed Cardon as CEO). Zito and D’Amico did not return phone calls, though Ryan Rauzon, a spokesman for Apollo Group, confirmed that the company gave Team ACA $100,000 in 2011 and another $100,000 the following year. He said attracting businesses to Arizona is good for the company and that Apollo supports using private funds rather than taxpayer money for certain expenses. D’Amico has since retired from Apollo but remains a Team ACA director. The only board member to respond was Vynalek, who said that he was not, and had never been, on the board of Team ACA. The inclusion of his name, he said, was “a clerical error.”
A Center reporter also tried an old-fashioned tactic: showing up at Team ACA’s office (nonprofit organizations are required by federal law to make their tax returns available for public inspection, if asked). Until October, the corporate filings listed the organization’s address as 1 North 1st Street, Suite 707 in Phoenix, an anonymous office building downtown across from the U.S. Airways Center, where the Phoenix Suns play. The seventh-floor space is occupied by Marketplace One, run by Bret Edson, who a receptionist said was a friend of Don Cardon. She said Cardon rented the space for about a month two years ago. She had received a few mailings for Team ACA, she said, but did not know how to get in touch with the organization (Team ACA’s address has now been changed to that of a Phoenix accounting firm listed on Team ACA’s corporate filings).
The Center then turned to what seemed like the last, best option: the group’s statutory agent, the lawyer listed on its corporate filings. James R. Hienton is a partner at Ridenour, Hienton & Lewis, a Phoenix law firm housed in the Chase Tower three blocks north of Team ACA’s old office (and across the street from the Commerce Authority headquarters). After repeated requests, Hienton’s assistant declined to provide the tax return, adding that all questions about Team ACA should be directed to David Drennon. The assistant was not familiar with Drennon, but a Google search revealed that Drennon is the vice president for strategic initiatives at the Arizona Commerce Authority. Drennon did not return phone calls. The Commerce Authority, meanwhile, has declined to answer questions.
Finally, though, the Center did obtain a copy of Team ACA’s 2011 return, which was filed in February. A new website, CitizenAudit.org, is in the process of scanning and posting online all nonprofit tax documents submitted to the IRS, and was apparently the only place with a publicly-available copy of the Team ACA document until the Foundation Center, one of those third-party sites that tracks nonprofits, published a copy in October.
The form shows that, from the group’s establishment in September 2011 through June 2012, it raised $200,000, just as Cardon said. While Cardon’s public comments suggest the money was contributed by Alliance Bank and Apollo Group, there is no way to confirm this, as most nonprofits are not required to publicly list the source of their contributions. During the period, the group spent $82,958 “assisting” the Commerce Authority, $30,000 on a salary for Don Cardon as director of Team ACA, and $34,957 on “advertising and promotion.”
On September 18, just days after the Center called Vynalek and Cardon, Team ACA filed papers removing them as directors and naming Colangelo as President. It remains unclear how much money Team ACA has spent since June 2012. The Commerce Authority finances are detailed on a state website, and show that Team ACA gave the authority $138,657 in August 2012, reportedly to pay retroactively for part of Cardon’s salary as CEO of the Commerce Authority. The site does not list any more recent transactions with Team ACA, but a public records request indicates that Team ACA wrote the Commerce Authority another check in August.