- Dec 23, 2006
Actually, you can be learned a lot from an internet forum. Who knew???Originally Posted by VeloFlash .
"House of Cards" could be an accurate description of Livestrong.
It is in danger from collapsing from outside pressure or from within.
Outside pressure could come from the IRS who regulates and investigates US charities with tax exemption status and can withdraw a foundation's tax exempt status (donors would not be able to claim a tax deduction on their contributions) if non compliance is found. The IRS will act on any complaint drawn to their attention and it is understood that Livestrong is currently being investigated.
These are the known issues without accessing Livestrong's non public books and records:
- Demand Media purchased the sub licensing rights to "Livestrong" and Livestrong.com The sale price was split 50% each to the Foundation (Livestrong.org) and Lance Armstrong (& his company). An unprecedented arrangement. Armstrong would have made a $34m profit on the transaction if he had sold his shares on listing. However, the SEC stepped in and drastically reduced his potential benefit to about 25% by rejecting the initial IPO.
- The travelling expenses of Livestrong are circa $2m per annum which is 20 times higher than the largest cancer organization in the US which receives a multiple of the donations paid to Livestrong.
- Salaries paid to executives are substantially higher than industry norm.
- There are issues relating to professional costs which have substantially risen over recent years.
- According to the Form 990 filed as linked on the web site the Foundation has issued for the first time an explanatory note. The note claims Mr. Armstrong made the largest single donation of $6m in the Foundation's history. The note implies the donation was made in 2010 and without that amount the Foundation would have returned abysmal industry comparative results.
- According to the Form 990 the Foundation has published the 2010 financial statements on its website. Those 2010 statements have not been published on the website.
- According to the Form 990 it is claimed the financial accounts are audited by a firm of accountants and another firm of accountants prepares the Form 990. This is not so. The same Austin Tx firm both audits the accounts and prepares the Form 990.
- During the course of the SCA Tribunal Hearing in 2005 an amount of $1.5m was paid to Indiana University Hospital as a donation by Livestrong. This amount was donated within days of affidavits being filed by the Andreus swearing to a conversation in Armstrong's hospital room in 1996 about drugs. As an alleged result of this donation the hospital could not identify the doctors present. Armstrong claimed under oath he had made the donation. The Hospital's media release was the donation came from Livestrong. The transaction raises serious questions about governance of the Foundation in the procedures of approving and granting financial support.
- Relating to the above, an affidavit was produced for the 2005 SCA Tribunal Hearing by a doctor wo was not present in the hospital room who swore he was not aware of LA admitting to taking PEDs. That doctor in 2005 was on the Lance Armstrong Foundation Board and in 2006 his hospital received a $500,000 donation from Livestrong. There was no statement made in the 2006 financial reports of this donation and that there existed a conflict of interest. Further governance issues as proper governance is critical to the IRS.
Livestrong would implode from within if Armstrong is convicted. It is a personality cult all built around him.