You scratch my back, I’ll scratch yours.

That seemed to be the mantra of Jeff Davis when he was “running” the for-my-profit-non-profit Palmetto Kids First Scholarship Program.

With his wife, Olga Lisinska, as the front-woman for his operation, Davis did all he could to “market” his program by coercing donor lists from special needs schools and taking money from donors in exchange for favorable scholarship opportunities for their special needs kids.

In 2014, that caught the watchful eye of the SC Department of Revenue. They decided to take a deeper look into Davis and Lisinska and their PKF program to see if something fishy was going on.

Apparently, there was.

In their audit of PKF, they called it what it was…

The marketing strategy, coupled with the grant of scholarships to the children of parents who donated to PKF, is evidence of quid pro quo arrangements. Quid pro quo arrangements violate the express prohibition of the [laws]. 

quid pro quo
/ˌkwid ˌprō ˈkwō/
noun

1. a favor or advantage granted or expected in return for something

In fact…

The Department ultimately determined that 100% of the children whose parents donated to PKF received scholarships, whereas the Department has some evidence that children with parents who did not donate to PKF did not receive scholarships. 

Jeff Davis even bragged to The State newspaper, actually admitting that there is some connection between “donations and who gets scholarships … out of fairness to the schools [that generate the most parent participation in the program for PKF]”

WOW!!

Poor ole Jeff missed one minor item, though –  TAX LAW!!!!

You can’t donate money to a non-profit, claim a tax credit, and then get goods or services in return.

Guess that means that every person who donated money, claimed a tax credit, and whose child then received a scholarship from Davis’s for-my-profit-non-profit broke federal and state tax law.

The SC Department of Revenue said it plain as day…

“Each designation violates the Provisos and bars a person or persons from claiming a tax credit based on their donations….If individuals claim tax credits that they are not entitled to receive, the action potentially causes an eligible and qualified taxpayer to lose the tax benefit intended by the General Assembly.”

Wonder how many people may owe some hefty back taxes now??

Then again, that’s the Art of the Backroom Deal for you.