Wednesday, November 30, 2022

Tom Brady Allegedly Used His Charity’s Funds to Finance His For-Profit Company

Thomas Edward Partick Brady Jr. or Tom Brady, the quarterback of the Tampa Bay Buccaneers, is accused of using money from his charity, the TB12 Foundation, to fund his for-profit company, TB12 Inc.

Brady is accused of using donations from the TB12 Foundation for sports therapy sessions, as first reported by The Daily Beast. TB12 Inc. employees carried out the therapy sessions. Since its inception in 2015, the TB12 Foundation has paid TB12 Inc. $1.6 million. Brady and business partner Alex Guerrero founded TB12 Inc in 2013.

TB12 Inc. is the TB12 Foundation’s sole independent contractor for sports therapy sessions.

According to 2021 tax records, Guerrero, who is also Brady’s health coach, is a director of the TB12 Foundation. John Burns, the former CEO of TB12 Inc., was also a director of the TB12 Foundation. According to tax records, TB12 Inc. listed Brady and Guerrero as TB12 Inc.’s “majority owners.”

Laurie Styron, executive director of an independent nonprofit monitor, spoke to The Daily Beast about the dubious findings regarding Brady’s foundation and corporation.

“I can say that I haven’t come across this type of arrangement too often in my 19 years of nonprofit financial analysis in a watchdog role,” Styron explained. “A charity’s board members have a fiduciary duty to act in the charity’s best interest at all times. Doing so becomes more complicated when there are competing interests between nonprofit and for-profit legal entities, particularly when the two organizations share key staff who must balance their fiduciary duties between the two. It has the potential to get tricky if there aren’t any adequate safeguards in place.”

The net assets of TB12 Inc. were $862,460 in 2015, according to the TB12 Foundation’s charity records, and increased to $2.17 million in 2016. TB12 Inc’s net assets increased to $5.72 million in 2017 before falling to $3.62 million in 2018.

TB12 Inc’s net assets fell dramatically in 2019 to $176,435 with a negative balance of $7.41 million.

“When a charity has related for-profit legal entity, it can turn into an accountability black hole,” Styron remarked. “If the charity is granting or reimbursing funds to the for-profit entity, and the for-profit is then paying money to other companies or individuals, there is a danger that charitable dollars are indirectly subsidizing the expenses of the for-profit. Money is fungible.”

According to the TB12 Foundation, charitable contributions do not cover TB12 Inc.’s expenses or salaries.