Steve Moak Responds to Criticism of Charity's Connection to His Business; In Response, Ben Quayle Calls for New Legislation

Categories: Election 2010
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Congressional candidate Steve Moak
Congressional candidate Steve Moak has finally responded to questions posed to him last week by one of his opponents in the crowded District 3 Congressional primary.

In short, Moak never disclosed a conflict of interest to the IRS when a not-for-profit anti-drug charity he founded was pushing the drug tests produced by his for-profit business. Moak sold the business for $25 million and claims there was never anything illegal or unethical about his ties to each business.

The criticism is that Moak used his not-for-profit charity as a marketing arm of his for-profit business, resulting in a huge profit when he sold the company.

Questions about Moak's charity were first raised by New Times a few weeks ago, so we figured we'd give Moak equal time to defend the criticism.

See Moak's letter, in its entirety, after the jump.

Dear Friends and Supporters, Some of you may be wondering about Ben Quayle's recent attempt to disparage the charity we founded, notMYkid. This is clearly a way for the Quayle campaign to divert attention away from Ben's real life issues as Steve has taken the lead in the polls. I know many of you have been asked about the questions raised in a negative attack mail piece sent out by the Quayle campaign. Here are the factual responses to these questions.


1. Why didn't you disclose the connection between notMYkid and First Check on IRS statements like you are legally required to? notMYkid has always fully disclosed its relationships with First Check and other organizations. A clerical error appeared on line 80 of notMYkid's original 2007 tax return. An amendment has since been filed by their accounting firm to correct this error.

2. Why didn't you tell donors at the time of the conflict? Steve Moak's position with First Check was widely known and never concealed from donors, nor was it a conflict.

3. Why did you use 80% of donors' money in 2005 to promote First Check? No money, including contributions from donors, has been used by notMYkid to promote First Check or to purchase products from the company. The majority of contributions received in 2005 were spent on drug prevention programs, which is the mission of notMYkid.

4. Why was the reference to you being the Chairman of First Check suddenly removed from the notMYkid website? The reference to Steve Moak as Chairman of First Check was removed from notMYkid's website because it was out of date. Steve's involvement with the company ended in 2007.


Keep in mind as I share some facts with you, that notMYkid has been providing prevention education programs in Arizona for over 10 years with only positive community interaction. Only in politics can good deeds be punished. Also keep in mind that everything Deb and I have done in regard to notMYkid and First Check we would do all over again tomorrow as this has helped save thousands of children and families from the scourge of drug abuse.

In 1999 after struggling with our son's drug abuse, we founded notMYkid, a 501(c)3, along with addiction specialist Dr. Mark Rohde and a board of directors. One of the primary ways that we discovered our son's drug use was through the use of a home drug test kit. We felt strongly that if we had been testing our son prior to his first use he would have had an acceptable way to say no to peer pressure. Beginning in 2000, Deb and I regularly purchased home drug tests by the case and gave them away to parents for free as part of our presentations to encourage them to not let these doors get opened in their own homes. Parents responded with gratitude for the free tests that we gave them to help in their homes. Deb and I gave away hundreds of drug test kits in those early years to anyone who would listen. We approached several companies and asked them to sponsor a prevention program and give away product to help with prevention, to no avail.

Believing strongly that we had discovered a way to keep kids off drugs we took even bolder actions. In 2004, when no one else would step up, we put a group together to find and purchase an insolvent home diagnostic company that had developed a rudimentary at-home drug test device. We poured money and time into this company, developed new and dramatically improved products. We used this company to make the programs we dreamed of available to kids and parents in Arizona and eventually across the nation. First Check donated about $150,000 and approximately 10,000 drug test kits each year to the program. In 2007, Inverness Medical approached me to purchase the entire line of products we had created. We sold First Check with a contract that the company would continue to provide the same program we had created to support notMYkid. That contract continues today with notMYkid.

We don't deny that notMYkid extolled the virtues of home drug testing as it did from the very beginning and still does today. In fact, notMYkid's main drug prevention program, Project 7th Grade, aggressively promotes home drug testing... because the organization believes it works! Because of this program and its impact President Bush appointed me to the White House Drug Free Commission during his 2nd term.

And here's the irony--while we owned First Check, we made test kits available to notMYkid and Project 7th Grade FOR FREE. And, they are still supplied today FOR FREE--even though we haven't owned the drug test company for 3 years--First Check continues their support for this program of notMYkid. We believe that this is exactly the kind of bold actions that more individuals and companies should take to solve such serious issues facing our children.

The bottom line is: my wife Debbie and I would do this all again. We are proud of notMYkid and proud of the home drug test product line we helped to create and make available, through our sale of this business, across the country. We are NOT going to be dragged down by this "politics as usual." We plan to fight for what is right, and for you. We will continue to answer any questions anyone has on this topic, but in the end you need to answer one question: Were the Moak's trying to prevent other families from the problems they faced, or have they spent the last 10 years (only 3 of which they owned a drug test company) looking out for themselves? You decide.

Deb and I especially want to thank everyone who has reached out to support us over this issue. For every parent out there who has struggled with losing a child to drug use, battled to get their kids back from an addiction, or have benefitted from the many prevention programs of notMYkid, we ask you to let the Quayle campaign know that attacking these prevention programs for over 100,000 students, their parents and faculties each year is NOT OK! Ben Quayle Campaign Headquarters 602 492-4236.

Your friend and candidate,

Steve Moak


Moak's media flak, Jerry Cobb, promised New Times last week that a "big shoe" would be dropped on Quayle simultaneous with Moak's response to his questions. We're yet to see any shoes drop from the Moak campaign, but Quayle dropped one of his own.

Quayle wasn't too impressed with Moak's response, saying that while it responds to his questions, "it fails to answer them." As a result, Quayle is seeking new legislation that would make it a felony to use a non-profit organization in any way to promote or enrich a for-profit entity controlled or owned by the same person.

"What was done with these two organizations was wrong and the non-disclosure of the connection was illegal under existing law," Quayle says. "But we can make the laws even stronger to prevent this kind of self-dealing and self-enrichment in the name and under the cloak of charity.  People need to be protected from this type of unethical behavior."

Quayle claims his plan is earning the support of Arizona House Speaker Kirk Adams, who says the following: "Commercial ties between non-profit organizations and for-profit companies should be transparent to donors.  I believe in profit motive, but not when it's hidden behind a charitable mission."


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3 comments
Rob
Rob

Pump the brakes Rebecca! No need for name-calling. The IRS requires listing of a conflict of interest if MORE than 50% of the owners or management of a business are also involved with the other entity. Steve Moak and his wife did not constitute over 50% of either First Check or notMYkid.

The mention of Ronald McDonald House and Paul Newman Foundation was to illustrate the point that there is nothing wrong with doing good for people and doing good for your business at the same time. A rising tide lifting all ships makes sense and there is nothing unethical about it. Steve Moak never hid the relationship between First Check and notMYkid... it was plastered all over both websites and in press releases.

Rebecca
Rebecca

Wait a minute Rob...you're comparing what Moak did to the Ronald McDonald House? How stupid!

First off, Ronald McDonald House was formed AFTER McDonalds became successful, not the other way around. Moak bought First Check years into running his charity. Ronald McDonald House didn't help McDonalds grow explosively. NotMyKid absolutely helped First Check go from, as you correctly said, a bankrupt company with little distribution to a major drug-test company. NotMYKid did so in large part by pimping the First Check kits for Steve Moak.

Moak is a SLIMEBALL!!

Phil
Phil

Steve Moak is a CROOK and so are you Rob. The IRS doesn't require disclosures of conflicts-of-interests?? WRONG! Moak lied to the IRS to save his charity''s a$$ from losing it's tax-exempt status. That's illegal and Moak's a CROOK!!

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