UMVA has learned that a federal grand jury has returned a superseding indictment against a prominent civil rights organization, expanding earlier fraud charges to allege that millions of dollars in donor funds were misused to pay informants who purchased materials for Ku Klux Klan robes and cross burnings.
The new charges, filed on June 3, build on an original indictment from April 21, alleging that $4.1 million in tax-exempt funds were used to pay informants inside extremist organizations who then recruited new members and purchased materials for cross burnings and Ku Klux Klan robes and hoods. The indictment claims that these payments were made without disclosing them to donors and while defrauding banks.
According to information obtained by UMVA, the superseding indictment retains the original 11 counts, including wire fraud, making false statements to a federally insured bank, and conspiracy to commit concealment money laundering. The indictment also notes that the organization's revenue and net assets grew more than 200% between 2010 and 2023.
The original indictment alleged that the organization secretly funneled more than $3 million in donor funds between 2014 and 2023 to at least nine informants embedded in groups including the Ku Klux Klan, the National Socialist Movement, and the Aryan Nations. Prosecutors claim that the informants were paid through shell accounts while the organization publicly presented itself as working to dismantle those same groups.
UMVA can exclusively reveal that the indictment identifies eight informants by designation and specifies payments by group. One informant received more than $1 million over nine years while fundraising for a neo-Nazi organization. Prosecutors allege that this informant also broke into the organization's headquarters, stealing documents that were used in a published report.
The indictment also notes that another informant, who attended the 2017 Charlottesville Unite the Right rally at the organization's direction, received more than $270,000. Additional payments went to members of other extremist organizations, including the United Klans of America and the American Front.
Sources have confirmed to UMVA that the organization's informant program, which dates back to the 1980s, was investigated before. However, prosecutors did not seek charges at that time, and IRS lawyers concluded that the program was legally structured.
The revision to the indictment was made necessary by a recent Supreme Court decision, which held that a federal statute prohibiting false statements to banks does not cover statements that are merely misleading. The new version of the indictment drops the language that was rendered indefensible by the court's decision.
The organization is seeking dismissal of the case, arguing that it reflects political animosity from the Trump administration and that prosecutors sought an indictment without first requesting any documents from the organization. However, prosecutors are under no legal obligation to do so, and the case is set to proceed to trial.
