UI honoring continued giving from indicted donors
Foundation says it would work with government if James and Darlene McCord are convicted
A couple that has donated or committed more than $1 million to the University of Iowa is facing federal charges related to tax evasion. But the UI is continuing to receive and honor the pair’s monthly gifts through its fundraising foundation.
James and Darlene McCord since 2008 have given $45,000 toward the UI rowing team's facility, the P. Sue Beckwith, M.D., Boathouse; $780,000 toward UI health care; and in 2010 they committed $1 million to the Hawkeye football program.
Their gifts to the UI boathouse and health care have been paid in full, and their $1 million commitment to UI football was more than half paid off when they were indicted in September on suspicion of evading taxes and defrauding the U.S. government.
Both James and Darlene McCord face 20 criminal counts, according to the federal indictment out of Las Vegas, Nev., including conspiracy to defraud the United States and making a false federal income tax return. According to the 19-page indictment, the couple is accused of — among other things — attempting to evade $797,032 in taxes due for the years 1999-2003 with the help of an associate, Wendell Leroy Waite.
They did so by establishing in 2004 three Nevada corporations with bank accounts and depositing millions into them “for the purpose of defrauding the U.S. Government in the collection of federal taxes,” according to the indictment.
The alleged criminal behavior occurred before the couple made its largest donations to the UI in 2008 and again in 2010.
The McCords and Waite are scheduled to be tried on the charges June 3.
Natalie Collins, spokeswoman for the U.S. Attorney’s Office in Nevada, said prosecutors can’t comment on whether the couple’s assets have been or will be frozen in conjunction with the case.
But the UI Foundation reports continuing to receive and honor automatic payments on the McCords’ $1 million Hawkeye football commitment, said Dana Larson, spokeswoman with the UI Foundation, an independent fundraising organization for the university.
The couple, so far, has paid $650,000 toward that $1 million commitment, and Larson said the Foundation will continue accepting payments until something changes.
“We are not privy to the court proceedings and can’t speculate as to how it’s going to come out,” she said.
If the McCords are convicted, and if government officials try to claw back some of the money already paid from their accounts, Larson said the UI Foundation will work with them.
“We absolutely would comply with any court decision,” she said.
James McCord earned a bachelor’s degree, a master’s and a doctorate from the UI, finishing his education in 1974. Darlene McCord is a biochemist with a doctorate from the University of California at Berkeley, according to the UI Foundation.
She specializes in the chemistry of skin-product formulation, according to the foundation, and she is the senior researcher for their Iowa-based corporation, McCord Research. James McCord is the director of business development.
The couple also owns Pinnaclife Inc., a Coralville-based company that provides nutritional and personal care products.
Both businesses are incorporated under the laws of Nevada and list Darlene McCord as president, according to the Iowa Secretary of State’s Office. The companies have active business licenses.
The McCords are members of the Presidents Club, which honors the UI’s highest-level contributors. A donor profile on the UI Foundation’s website states that the couple believes in the “power of character and commitment.”
"We know them well"
Most donations to the UI through the foundation are cash or publicly traded stock, Larson explained. When accepting those gifts, she said, the UI Foundation assumes the donor is “giving with the best intentions and will fulfill their commitment to the university.”
In regards to non-cash gifts – such as real estate, equipment or art – the UI Foundation reviews them before accepting them by considering value, marketability and appropriateness, Larson said.
Most of the McCords' donation commitment to the football program is cash, according to Larson, although they also made an in-kind gift of $14,000 to the football office in the form of furniture.
When it comes to vetting donors before taking their money, Larson said, the UI Foundation follows industry “best practices” by making sure the gift honors the donor’s intent and meets UI needs. In many cases, she said, the UI has a longstanding relationship with the donor.
“Most of our donors, particularly major donors, have a relationship with the university, and we know them well,” she said.
The UI’s relationship with James McCord started back in 1983, when he first began giving to UI athletics, Larson said. And, she said, it is “exceedingly rare” that the UI turns away donations.
“An overwhelming number of gifts are from alumni and friends of the UI who want to benefit the university,” she said.
UI law professor Patrick Bauer said there have been instances when philanthropists go belly up, and the government attempts a claw back of its assets. But, Bauer said, one of the often-cited reasons behind those efforts is to deprive the accused of any gain.
“So if it’s gone to the UI Hawkeye football program, there’s not much benefit in trying to get it back,” Bauer said. “I would think a prosecutor would think twice before taking on old Herky.”
James and Darlene McCord timeline
- 1969 — James McCord earns a bachelor of science degree in psychology at UI.
- 1972 — He earns a master’s degree in counselor education at UI.
- 1974 — He earns a doctorate in education at UI.
- 1983 — He starts making donations to UI athletics.
- 1998 — The couple founds McCord Research, an Iowa-based company committed to the research and development of supplements for longevity and health.
- June 2003 — The couple is accused of having an outstanding IRS personal income tax liability of $197,420 plus an additional outstanding IRS penalty of $547,788.
- September 2004 — The couple is accused of establishing three Nevada corporations with associated bank accounts — TOB Management Inc., Que 1, Inc. and HTR Group Inc.
- April 2005 to October 2007 — The couple is accused of working with a third person to file multiple fraudulent tax returns.
- April 2008 — The couple commits $45,000 for the new P. Sue Beckwith, M.D., Boathouse.
- October 2008 — The couple makes an initial commitment of $2.3 million to UI biomedical research.
- April 2010 — The couple commits $1 million to the Hawkeye football program.
- 2011 — The couple pays off a revised commitment of $780,000 to UI biomedical research.
- To date — The couple has paid off $650,000 of their $1 million UI football commitment.
Sources: University of Iowa Foundation, McCord Research, and the U.S. Attorney’s Office in Nevada
University of Iowa donors
Below are the top 10 cumulative donors through the UI Foundation.
1. Roy J. Carver Charitable Trust and Carver Family
2. John and Mary Pappajohn
3. Henry B. and Patricia B. Tippie
4. Jerre and Mary Joy Stead
5. Holden Family and Holden Foundation
6. Stephen A. and Andrea Wynn
7. E.J. and Joanne Buresh and family
8. Fraternal Order of Eagles
9. Marvin A and Rose Lee Pomerantz
10. Russell A. and Ann S. Gerdin family
Source: University of Iowa Foundation