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The Fangangsters (XI): OSAIC Falsified Their Tax-exempt Application with IRS (1026 查看)

January 06, 2016 09:37AM
【The PDF version of this article is HERE.】


Shamelessness Shouldn’t Be Anyone’s Nature──An Open Letter to Nature (Part L)


Xin Ge, Ph. D.


Columbia, SC, USA


The Fangangsters (XI): OSAIC Falsified Their Tax-exempt Application with IRS


【Abstract】

On October 14, 2015, I formally filed the Form 13909, the Tax-Exempt Organization Complaint (Referral) Form of the Internal Revenue Service (IRS) of the United States of America, against The Organization for Scientific & Academic Integrity in China (OSAIC). This Part and the previous one of the Open Letter to Nature are the supporting evidence for the Complaint, sent to the IRS along with the Form. In this Part, I’ll prove that Dr. Zuohong Pan (Jeffrey Pan), the then President of OSAIC, and a professor at the Western Connecticut State University, provided IRS with false evidence and misinformation, intentionally, to gain the tax-exempt status for the organization. Slight modifications and corrections are made from the original document.



On April 5, 2007, The Organization for Scientific & Academic Integrity in China (OSAIC) submitted to IRS their Form 1023, which is used for “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code” in the United States. According to IRS record, OSAIC’s initial application “was closed administratively because you failed to respond to our request for additional information.” On March 21, 2009, Jeffrey Pan (real name Zuohong Pan, the president of the organization at the time),resubmitted the application with additional information requested by IRS, and the application was approved seven months later. On Nov. 4, 2009, OSAIC announced the news on their website:

The application for the nonprofit tax-exempt status of OSAIC has been approved by the Internal Revenue Service of the United States of America

After a long period of waiting and multiple submissions of supplemental materials and explanations, the application for the nonprofit tax-exempt status under Section 501(c)(3) by this Foundation has finally been approved by the Internal Revenue Service of the United States of America. Special announcement!

The approval date of the nonprofit tax-exempt status of the Foundation is Oct. 26, 2009, and the effective date of exemption is the birthday of the Foundation, Sept. 20, 2006, therefore, every donation made to the Foundation is eligible to take advantage of the status.

Those people who have made contributions in 2009 or those who will make contributions in the future to the Foundation and need tax refund, please contact the board of the Foundation (donation@osaic.org), and inform us your name and email address so we could send the receipt. The tax periods for 2006-2008 have passed already, however, if any contributors have special needs, please contact us also.

With the approval of the nonprofit tax-exempt status, OSAIC will become the matching institution for certain companies which have policy to support charity, for example, to encourage their employees to support charity, certain companies will make matching contributions at a 1:1 ratio to the charitable institutions. Therefore, we encourage our contributors to remind your employers to make such contribution. The detailed information about OSAIC is:

EIN: 22-3943516
Address: OSAIC, PO Box 287, Cherry Hill, NJ 08003 USA
Tel: 917-804-3070
Website: www.osaic.org
Contact: Jeffrey Pan
Email: admin@osaic.org



Exultation
The above is the screenshot of OSAIC’s special announcement of the approval of the Form 1023 application, translated above.



Zuohong Pan
Dr. Zuohong Pan (潘佐红) served, under a fake name of Jeffrey Pan, as the first and second Vice President of OSAIC from 2006 to 2008, and the third and fourth President from 2008 to 2010. During his tenure with OSAIC, Pan never revealed his real name, either English or Chinese, and his true identity to the public. He left the organization after his identity was exposed on the internet in 2010 (for example, in this post: 2010-09-27 18:29:38). Dr. Pan has been a faculty member in the Department of Social Sciences at Western Connecticut State University since 1990s.



The signature
Pan’s signatures on Form 1023 and on a letter he sent to IRS on Sept. 19, 2009.


In the following part of this document, I’ll demonstrate that OSAIC gained their nonprofit exempt status by presenting, intentionally, false information.

1. The story of the application and approval

The key issue concerning the application is whether The Organization for Scientific & Academic Integrity in China (OSAIC) was formed to give financial help to specific individuals. In section Part VI on Form 1023 (page 5), the second question is:

“Do any of your programs limit the provision of goods, services, or funds to a specific individual or a group of specific individuals?”

The applicant answered the question with a “No.” (See: Exhibit 1, attached to the file at the end.)

On page 11 of Form 1023, Part X, the 7th question is:

“Did you receive any unusual grants during any of the years shown on Part IX-A. Statement of Revenues and Expenses? If "Yes," attach a list including the name of the contributor, the date and amount of the grant, a brief description of the grant, and explain why it is unusual.”

The applicant answered the question with a “No.” (See: Exhibit 2.)

In their application, the organization also attached several attachments (I have copies of Attachments C to F, but no A & cool smiley, apparently trying to demonstrate that they do not work for a specific individual or a group of specific individuals. For example, in Attachment C, section II: Future Activities, it says:

“2. To edit and publish books to promote scientific knowledge among Chinese community, both in China and Overseas.” (Exhibit 3.)

On another page without header, which appears to be a part of the response to IRS agent Tomback from OSAIC’s first president Feng Zhang, made in October 9, 2007, “Future Activities” include two projects:

“I: To edit and publish books to promote scientific knowledge among Chinese community, both in China and Overseas.”

“II: Support for Professor Zhao's Lawsuit in China.”
(Exhibit 4.)

And on the next page, it states:

“3. Most mentioned in 3 are right, however, our organization was formed not only to solicit donations for Dr. Shimin Fang.” (Exhibit 5.)

And on another page, under section 8, “break down,” it shows that the organization had paid Professor Zhao $5,000. (Exhibit 6.)

Attachment D answers two questions in section Part VI of Form 1023:

“Ia: Our organization will provide funds for any individuals who would help facilitate our mission statement. Any individual can come to our organization to apply for funds for activities that will promote scientific & academic integrity or scientific knowledge among general public in China. Those activities include, but not limited to, publishing books or articles, travel to give general seminars, etc. Please refer to Attachment C: our past and future activities.”

“Ib: Our organization will treat individuals or organizations who apply for funds exactly the same. So please refer above description.”
(Exhibit 7.)

Apparently not convinced by the above statements, on Sept. 1, 2009, IRS agent Louis Johnson wrote to Jeffrey Pan, the then president of OSAIC and the one who signed the application, asked him four questions, the first one was this:

“It appears that the organization has been formed to provide funds for the legal defense of specific individuals. Am I correct in my preliminary assessment of the organization?” (Exhibit 8.)

Mr. Pan answered the question, dated Sept. 19, 2009, as following:

“According to OSAIC's bylaw, the purpose of the organization is to "provide financial support for efforts in the exposure of and legal actions against scientific and academic frauds, as well as promotion of general scientific knowledge in China." So there are two closely related purposes. One is to support the legal actions against scientific and academic frauds, and two, to promote scientific knowledge. Many times scientific frauds are committed by taking advantage of the lack of scientific knowledge on the part of the general public. OSAIC considers it equally important to educate general public about the scientific knowledge and reveal what is really the pseudoscience in academia and our daily life. For an example of the scientific fraud affecting consumer products, please see Attachment 1 (Mengniu Case). OSAIC considers it consistent with its purpose to support efforts to reveal such scientific fraud as well.” (Exhibit 9.)

It seems that Mr. Pan delicately and deliberately avoided giving a direct answer to the simple question. So, on Oct. 2, 2009, Mr. Johnson sent a letter to Pan again, asked him the same question. (Exhibit 10.) Here is Pan’s answer, dated Oct. 9, 2009:

“No. OSAIC has been formed to promote science education to the general public and to support efforts by anybody from general public or academia in their exposure of and legal actions against scientific and academic frauds. It is not set up to benefit specific individuals.” (Exhibit 11.)

And the approval letter was sent to the applicant 17 days later.

2. The Truth

The truth is, the organization was not only formed especially and particularly to fund a specific individual, it was actually masterminded and organized by that individual, who is Shimin Fang (or Fang Shimin, known better in China as Fang Zhouzi). I have demonstrated this point in a separate document, “The Organization for Scientific & Academic Integrity in China is Shimin Fang’s money machine” (attached); here, I’ll point out the specific lies in the application and Mr. Pan’s correspondences.

(1) “To edit and publish books to promote scientific knowledge among Chinese community”

The organization has never mentioned in their Chinese announcements, statements, and on their website that they has ever had such a plan; and the fact is, they have never done such a thing in the past 9 years.

The fact is, none of the projects listed in Mr. Pan’s letter to IRS, dated Sept. 19, 2009, barring those closely related to Shimin Fang (such as lawsuits against Dr. Chuanguo Xiao), has ever been accomplished, and it is extremely doubtful that they have ever been actually attempted to implement. Specifically, the following stated projects are plain and intentional lies:

Fund scientific book writing and book translation project;
Fund science education book translation project;
Fund fraud investigating project;
Fund scientific workshops and seminar project.

(2) “Support for Professor Zhao's Lawsuit in China”

The fact is, OSAIC has never paid Professor Zhao a penny, which could be verified easily by checking the Expenditure page of their website.

The truth is, in OSAIC’s history, they have never funded any person unrelated to Shimin Fang, let alone actively seeking for such a person’s application.

However, on Oct. 8, 2007, one day before Feng Zhang, then president of OSAIC, responded to Mr. Tomback’s inquiry, the organization did post a message on Fang’s website, asking: “Are there any people who can tell Yuzhong Zhao to contact us?” (See: 2007-10-08, 15:29:56.) And one of the New Threads users replied: “The webmaster [referring Fang] must have his contact information.” (Exhibit 12.) It seems that everyone knows that fact, yet OSAIC wanted to make a public post. Also, while Zhao filed his lawsuit in May of 2007, OSAIC waited till the last minute to looking for his information. It seems that the message posted online was particularly intended to falsify an evidence to substantiate their statement to IRS.

On the other hand, OSAIC paid Fang and his lawyer Jian Peng only $4,800 in 2006 for two lawsuits, which was already overpaid (more on this in the other document), so, how could they want to pay Professor Zhao $5,000 for a single case? (It cost Zhao 100 Yuan, about $15, to file the lawsuit, and the prevalent attorney fee at the time was about 3,000 Yuan per case.)

(3) To “provide funds for any individuals” and “treat individuals or organizations who apply for funds exactly the same”

It has been an open secret to many Chinese people that OSAIC was formed by Shimin Fang and it works for him only, so rarely any people were so stupid or brave to apply for their funding. However, I was one of the few.

On Jan. 3, 2012, I applied for a funding from OSAIC to get, via FOIA, the documents involved in the investigation on Shimin Fang’s alleged plagiarism committed back in 1995 against one of Fang’s professors at the Michigan State University. (Exhibit 13) Not only did OSAIC reject my application (Exhibit 14), they also stated in their 2011-2012 Annual Report that they didn’t receive any applications for financial support. (Exhibit 15.)

(4) The “Mengniu Case”

Mr. Pan listed a “Mengniu Case” in his letter to IRS to demonstrate “the scientific fraud affecting consumer products” so Fang’s so called “fraud fighting” or “fraud busting” benefits the general public.

The fact is, Fang’s fight against Mengniu milk itself is a fraud, and the fraud was exposed by me on Feb. 16, 2009, 7 months before Pan’s letter: I posted my article entitled Who is cheating, Mengniu or Fang Zhouzi? (《到底是蒙牛蒙人,还是方舟子蒙人?》) on my blog on sina.com and a forum on tianya.cn, and it was soon reposted by other people on many other websites.

The fraudulence of Fang’s case is actually revealed in Pan’s Attachment 1. According to the article which was apparently written particularly for Pan’s letter to IRS, it says:

“On March 23, 2007, Fang Zhouzi wrote in a newspaper column that such a claim could not be valid. The term OMP appeared to be an invented name that did not exist in scientific literature. Even if such a protein existed, he said, it would not have any benefit as no proteins could survive the digestion process to affect bone growth in human bodies.

“A month later, Fang Zhouzi learned from a patent application by Mengniu that the so-called OMP is most likely to be IGF-l, or Insulin-like Growth Factors, a well known protein. While IGF-l exists naturally in milk products, it appeared that Mengniu is also using it as an additive to "enhance" the value of their product. Indeed, the Telunsu brand is selling at a much higher price than regular milk. However, milk with rich IGF-I content could also impose health risk such as cancer.”


Since “no proteins could survive the digestion process to affect bone growth in human bodies,” how could IGF-1, a protein, “could also impose health risk such as cancer”? Here is what I wrote in English in 2012 to expose Fang’s fraud to western news media:

“Fang’s ignorance in biochemistry is forever amusing. In 2007, for some reasons unknown to the public, Fang suddenly launched an attack on a certain brand of milk, accusing the manufacturer of intentionally and artificially adding insulin-like growth factor 1(IGF-1) into their milk products. According to Fang, the content of IGF-1 in the adulterated milk was 5.65-16.8 mg/100g. Only after one of his followers reminded him that growth factor proteins should be very expensive to prepare, then Fang realized he had been making a fool of himself── the cost of producing the supposed carcinogenic milk would be three or four orders of magnitude of its selling price.” (Xin Ge. Shamelessness Shouldn’t Be Anyone’s Nature ──An Open Letter to Nature, Part III. China Academic Integrity Review, November 11, 2012.)

(5) “No unusual grants received”

By the time OSAIC re-submitted their Form 1023 on Mar. 21, 2009, the organization had received 228 donations in a total of $37,404. However, more than 45% of the money came from 11 donations, and 8 of these big donations came from anonymous sources. The most suspicious donations were made on Feb. 7, 2007, when a secret entity sent six consecutive checks, $1,000 each, to the organization. In comparison, in the first 37 days of the year, the organization received only 4 donations, worth $560 in total.



As of now, OSAIC has received more than $130,000 in donations, and the “unusual” portion remains the same (more on this in the other document.)

3. Conclusion

OSAIC falsified their Form 1023 application and presented false evidences intentionally to IRS to gain their tax-exempt status. And they succeeded.

On Sept. 3, 2015, I sent the following message to the administration of the organization (Exhibit 16):

Dear OSAIC,

According to the announcement on your website, OSAIC received its Federal Tax Exempt status in 2009.

According to IRS regulations, "Exempt or political organizations must make their returns, reports, notices, and exempt applications available for public inspection."

I hereby request a copy of all of your returns, reports, notices, and exempt application.

Please let me know if you have any questions regarding to this request.

Sincerely yours,

Xin Ge


As of today, I have not heard anything from them.

It seems that not only does OSAIC have something to hide, they also despise the federal regulation.


Appendices: The Exhibits.

Exhibit 1: OSAIC denies they serve specific individuals on Form 1023.



Exhibit 2: OSAIC denies that they have received unusual grants on Form 1023.



Exhibit 3: OSAIC claims that they intend to edit and publish scientific books.



Exhibit 4: OSAIC claims that they plan to edit and publish scientific books and support Professor Zhao's lawsuit.



Exhibit 5: OSAIC denies that they was formed to collect money for Fang Shimin only.



Exhibit 6: OSAIC claims that they have paid Professor Zhao $5,000.



Exhibit 7: OSAIC claims that they will treat everyone equally.



Exhibit 8: IRS agent Louis Johnson asks OSAIC whether they was set up to serve certain people.




Exhibit 9: Jeffrey Pan’s reply to Mr. Johnson’s question, attempting to avoid answering the question directly.



Exhibit 10: IRS agent Louis Johnson asks OSAIC again whether they was set up to serve certain people.



Exhibit 11: Jeffrey Pan’s reply to Mr. Johnson’s second letter, denies OSAIC was formed to serve specific individuals.



Exhibit 12: One day before President Zhang’s sending their response to IRS inquiry, OSAIC asked for Professor Zhao’s contact info.



Exhibit 13: My application for OSAIC funding, filed on Jan. 3, 2012.

Note: Fang Shimin committed plagiarism in 1995 while he was a graduate student at Michigan State University, and the plagiarism was discovered and reported to the University in 2010. Although the University believed it is a plagiarism case, they refused to further investigate it, citing two sequential and conflicting reasons. To get the complete documents involved in the preliminary investigation, the University wants to charge a $2,100 fee. So I asked for help from OSAIC. The above the screen image of my application. For detail about the plagiarism story, please see: An Open Letter to Shi-Min Fang from Dr. Robert Root-Bernstein, and Shamelessness Shouldn’t Be Anyone’s Nature ──An Open Letter to Nature, Part XXV: The Michigan State University Case.



Exhibit 14: OSAIC’s rejection letter, refusing to provide me with the fund to investigate Fang Shimin’s fraud.

Note: On Jan. 19, 2012, I received the reply letter from OSAIC, signed by its PR manager Eddie Cheng, rejecting my application. According to the letter, the board of directors had read my book, Chronicle and Demonstration of Fang Zhouzi’s Plagiarism and Copyright Infringement, but didn’t find evidence for Fang’s cheating; and they believed that the document I was seeking for would be useless because the Freedom of Information law of Michigan would make the information about Fang redacted.



Exhibit 15: OSAIC denies on their 1022-2012 Annual Report that they have received my application for funding.

Note: In January 2013, OSAIC posted their 2011-2012 Annual Report on their website. Under the second section, Expenditures, the report states: “No financial aid applications have received in this fiscal year.” (The red boxed sentence.)



Exhibit 16: My request for OSAIC’s tax returns was sent to them on September 3, 2015, but I have received no response.





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