Geraldine and Clayton Hill pleaded guilty to using a charity to evade taxes and defraud donors. The Hills founded On Your Feet, a tax-exempt charitable organization whose mission was to provide assistance to low income families and individuals in need in San Diego.
The Hills received millions of dollars’ worth of goods from companies such as Feed the Children and Forever 21, with the explicit commitment that they would not sell any of the donated goods. However, between 2011 and 2016 they received over 16 million dollars’ worth of goods, sold it for a profit of 1.3 million dollars, and paid no taxes. They made charitable donations of only $13,000.
In 2015 Forever 21 donated 161 pallets of clothing valued at 5.6 million dollars. The Hills immediately sold the entire donation to a middleman for discount retailers. They then spent $380,000 on personal expenses, vacations, entertainment, cars and luxury retail purchases. They spent another $322,000 in cash.
In the organization’s 2009 tax return the Hills claimed they received less than $25,000 in gross receipts, and in tax years 2011-2015 they claimed less than $50,000. For 2013-2014 they caused the US an estimated tax loss of $50,933.
They face a maximum sentence of five years in prison for each tax evasion charge and mail fraud conspiracy.