Miller Enriched by Self-Dealing at Advance America

Like D.C. Stephenson used the KKK in the 1920s to personally enrich himself, Advance Indiana can report that Eric Miller has used Advance America’s non-profit status to personally enrich himself through inflated six-figure salaries, legal retainers for his law firm and other acts of self-dealing. Between 1998 and 2003 Miller pocketed more than $1 million in tax-subsidized dollars for his salary, legal fees and other benefits from the organization he founded. Miller served as the organization’s executive director continuously over the past twenty-five years, stepping down in 2004 to mount his unsuccessful bid for the Republican nomination for Governor. The period analyzed covers but a small period of Miller’s tenure at the helm of the organization, suggesting that he has personally benefited far more than the million dollars he parlayed for himself during this six-year period. Equally disturbing is Advance Indiana's discovery that Miller’s private law firm shared the tax-exempt organization’s pricey office space and utilized the organization’s employee services throughout this period.

As the organization’s executive director, Miller was paid $621,168 in salary during the period of 1998 through 2003, averaging $103,528 in annual pay. A survey conducted by Towers Perrin of 376 nonprofit organizations at the same time Miller was earning an annual salary of $109,085 found that the average annual salary for the top executive of an organization with an annual budget of less than $1 million was $78,500, over $30,000 below Miller’s annual pay. Beginning in 2002, the organization also began making substantial contributions to Miller’s benefits plan to offset reductions in his annual salary. In 2002, the organization contributed $11,000 to Miller’s benefits plan, and it chipped in another $14,000 in 2003, upping Miller’s personal take $25,000 during the 2-year period.

The organization leases an automobile utilized by Miller. According to Advance America’s tax returns the organization spent $63,201 in automobile expenses during the period of 1998 through 2003. During this same period, the organization spent $97,536 for office parking, presumably including parking for Miller. In some years the organization spent as much as $20,000 for employee parking. Downtown parking typically costs about $150.00 per month. The amount shelled out by the organization for parking would have been enough to furnish parking for 11 employees, well above the small staff employed by Advance America.

Federal tax regulations require non-profit organizations to disclose the identity and amount of any employee or independent contractor of the organization who is annually paid $50,000 or more. Other than Miller’s law firm, the organization reported no independent contractors earning $50,000 or more from 1998 to 2003. In addition to Miller, it paid just two employees $50,000 or more during the reported period. In 2001 the organization paid Rick Terry $53,987 to serve as its Director of Development. The organization replaced Terry with Larry Woods for the same position in 2002 and paid him $64,262.

In addition to serving as the organization’s executive director, Miller is a principal of the law firm he founded, Miller Waters Martin & Hall. According to the firm’s web site, http://www.indyattorney.com/ , the firm’s areas of practice are personal injury law and general practice. The firm’s website indicates that four other attorneys practice at the firm in addition to Miller, including James E. Waters, Duane C. Martin, Steven R. Hall and Stephen H. Shroyer. The offices for Advance America and the law firm are located in the same suite of offices located at the same mailing address at 101 West Ohio Street, Suite #660, Indianapolis. In a blatant act of self-dealing during the period of 1998 to 2003, Advance America paid Miller’s law firm nearly $300,000 for legal consulting services. Prior to 1998 Advance America typically paid no more than $2,000 a year for legal services; however, these expenditures shot up in 2001 when the organization paid Miller’s law firm $64,500 for legal services. That amount nearly doubled in 2002 to $116,500. In 2003 the organization paid Miller’s law firm $115,500 for legal services. Miller has pocketed as much as one-third of the organization’s annual reported revenues for his salary and legal fees.

The type of legal work being conducted by Miller’s law firm on behalf of the organization is not specified in its tax returns; however, such large legal payments for an organization with an annual budget well below $1 million as Advance America is particularly troubling. Miller was already being compensated as a full-time executive director. Is Miller’s law firm also being paid for legal work performed by Miller? Is the firm being compensated for lobbying work performed by Miller or other attorneys at the firm? Other than Miller, the firm does not register as a compensated or employer lobbyist in Indiana. It is doubtful that the payments can be attributed to lobbying work since the organization purports to have annual lobbying expenditures well below $50,000. The payments clearly raise more questions than they answer.

The reality is that it is difficult to separate Miller’s private law practice from the organization’s operations. According to the tax returns filed by Advance America, Miller’s law firm shares office space leased by the organization and vice versa. In addition, Miller’s law firm also sometimes shares the organization’s employee services. The office space shared by Advance America and Miller’s five-man law firm are conveniently located just one block from the State House. Because of its prime location, Advance America spent $451,988 for its leased space from 1998 through 2003. According to the tax returns for this period, the organization received only $59,103 in reimbursed expenses, with no reimbursed expenses reported for 2003. This raises the question of whether Miller’s firm paid its fair share for the rent and the use of employee services.

The payment of these large legal consulting fees to Miller’s law firm, along with the sharing of office space and employee services, raise serious questions about whether these are good faith transactions taking place at arm’s length, and whether they are in the best interests of the tax-exempt organization. The board of directors and officers for the organization who must approve these transactions have remained constant between 1998 and 2003. In addition to Miller, they include the following individuals, all men: Dr. Robert Taylor of Indianapolis, the organization’s current president; Pastor David Miller of Mishawaka; Dr. Warren Dafoe of Indianapolis, its secretary-treasurer; Dr. Clinton Branine of Greenwood; Dr. DeWayne Felber of Indianapolis; Dr. Collins Green of Muncie; Dr. Bud Steadman of South Bend; and Dr. Roger Voegtlin of Chesterton. The board members have essentially been hand-picked by the organization’s founder, Eric Miller. Although the organization’s contributors make up its members, the membership at large does not participate in the selection of the organization’s board members and officers. Advance America is not legally required to disclose to the public the identity of its members, and it does not voluntarily disclose this information to the public.

Advance Indiana’s analysis of Advance America’s organization raises some very troubling issues. One thing is clear: the organization’s founder and top executive has used the tax-subsidized organization to personally enrich himself tremendously. If the organization expects the public to continue subsidizing its activities, it owes the public a truly independent audit of its activities to determine the appropriateness of the inter-woven relationship between Miller and his private law practice and the fairness of the transactions conducted by and between Miller and his law firm from the standpoint of the organization. The questions raised by this analysis are further evidence that a federal investigation of the organization is in order to determine whether it is indeed entitled to its tax-exempt status. Advance Indiana thinks that a purely political organization like Advance America should never be granted tax-exempt status. Only a federal investigation can resolve this question.