Judge’s Decision Jeopardizes Non-Profit Foundations

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kwfIn 1996, Detroit attorney, author Gregory Reed launched the Keeper of the Word Foundation (?KWF? or the ?Foundation?) an uncommon foundation, with the purpose of protecting the legacies of authors, artists, and activists.? The foundation achieved international acclamations from the United States Department of Education, the American Association of Museums, President Obama, Michelle Obama, Michigan State University and State officials. Among the notables under its works and rubric are Nelson Mandela, Rosa Parks, Malcolm X, Alex Haley, President Obama, MLK, Coretta Scott King, Damon Keith, John Conyers, Aretha Franklin, Anita Baker, Stevie Wonder, Temptations, Motown artists, and other civil rights icons.?

Along with KWF?s aim to secure precious and primary African American research and artifacts, the Foundation has been a donor and supporter of a number of local and national institutions, including the Detroit school system, a recipient of more than $40,000 in books and materials from the Foundation and lending materials to the Smithsonian Institution, HBCU Colleges, Walt Disney, and major universities.

If a recent court order prevails and stands, the Foundation?s assets will be turned over to the U.S. Trustee for sale and liquidation in order to pay debts of a third party without any supporting law and contrary to charitable laws for the past 100 years.? It also countervails Michigan Attorney General Bill Schuette?s Opinion 7272 on June 13, 2013.
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Sounds familiar?
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Well, for many residents in Detroit and avid readers it certainly is, and it resounds with the same measures taken to confiscate the assets of Detroit Institute of Arts (DIA) to help relieve the financial bankruptcy of the city. Such was the motion of the process until Michigan Attorney General Bill Schuette intervened and re-educated Michigan judges, lawyers, creditors and Detroit residents and issued a 23 page opinion #7272, that this is contrary to charitable laws since 1855.

Given the court action, KWF?s assets were threatened by a lien against Reed by his ex-spouse that is commensurate with expropriating property of the charitable Foundation?s jurisdiction to benefit a private person or a few.?? The taking of property for any private benefit of creditors in prohibited by law, according to state and federal charitable tax laws.

According to KWF?s records Reed and third parties have donated art and artifacts to KWF for 20 years. ?The charitable foundation is protected by Federal and state charitable laws in the same way the DIA is protected,? said Reed. Reed and KWF are appealing the decision rendered by U.S. Bankruptcy Judge Marci McIvor.
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Community organizations and residents familiar with the case have expressed that Judge McIvor, former State of Michigan Attorney General, has set forth her own rules with a rushed opinion before the holiday, with several mistakes, including parties? names, an incorrect property address, and misplaced facts.
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In her original ruling, Judge McIvor, according to court transcripts, found on six occasions on October 7, 10 2015 and November 10,2015 that the Foundation records were complete and in order covering a 19-year period and that ?Reed is not an alter ego, of KWF?, therefore KWF is not liable for his obligations.? Also the records of the Foundation were independently audited for a 20-year cycle by a CPA firm and an approval ?certificate of compliance? was issued earlier on March 28, 2015.

On December 17, 2015, months later, Judge McIvor changed her six rulings, with a rushed opinion, which contradicted her court?s decision, U.S. and State laws and she ruled a nonprofit can pay unrelated debts of a third party.

Complicating the case is the role of trustee attorney David Findling, once Reed?s counsel but now representing his ex-spouse.? ?This is clearly an unethical conflict of interest,? Reed said.? ?His sole purpose is to acquire the Foundation?s artifacts to satisfy his own interest and his client?s debt second that was paid in 2005. A quit claim deed signed by the spouse evidencing payment in full was recorded in Wayne County Records, the deed was concealed by Findling in his official receiver report submitted to the court.? Findling never corrected the report after the omission was disclosed.

Meanwhile, Findling, whose conduct and behavior have been construed and questioned in the professional community and labeled as the ?garbage man,?, profiled and cited in a court record pleadings filed by attorney Michael E. Tindall in a class action once filed in Wayne County circuit court. In the lawsuit Findling was charged with similar illegal schemes and acts. Also he was the principal Architect and Facilitator of taking property without due process and liquidating property illegally.

Findling?s misconduct is currently being reviewed for investigation by the Attorney Grievance Commission for perjury, fraud, and conflict of interest.? According to court?s records Findling has been removed from 14 known bankruptcy cases, signed by Chief Judge Steven Rhodes and several other federal and state judges. Findling as a court receiver had attempted unlawfully to sell assets valued at $17 million for $50,000 to benefit his own interest reported by Attorney Michael A. Reynolds and Jamal J. Hammood as noted in Wayne County Circuit Record Case.

In effect, Judge McIvor?s KWF ruling goes against the opinion of Judge Rhodes and if left standing can have reverberations that jeopardize other selected non-profit institutions faced with having to pay for third party debts.? The court is utilizing Findling as special Counsel? and liquidator to the U.S Trustee Office for unrelated debts of the Foundation; and without supporting law based on Michigan Attorney General Chief of Staff who was not persuaded to touch the Foundation as cited in the Court?s record.
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?This is a very important charitable institutional legacy case, for America?s various cultures not only for KWF or me personally, the decision is injurious to many Foundations, churches, educational institutions, and museums that can be exploited, or arbitrarily selected,? Reed said.? ? It?s a fight that many or various institutions? and community organizations have to take a stand and wage in order to have the laws be equally administered the ruling having national implications, that can strip foundations of their valuable and educational assets.??