An Iowa City couple known to have pledged more than $3 million to the University of Iowa over the years have been charged with avoiding more than $700,000 in taxes, according to federal court documents.
James and Darlene McCord, along with accountant Wendell Waite, allegedly created various companies in Nevada — including TOB Management Inc. — along with bank accounts tied to them, to hide money from the IRS.
According to the McCord Research website, Darlene McCord is a senior researcher known for her work in skin, wound care, and nutritional supplements. James McCord graduated from the UI with all three of his degrees including a Ph.D. in college administration.
Through his contacts, he has made connections with many major companies.
Court documents allege on June 23, 2003, that the McCords owed the IRS $197,420 in personal income taxes, along with an additional $547,788 for an IRS Trust Fund Recovery Penalty.
According to a release from the U.S. Attorney of Nevada, the McCords allegedly deposited approximately $2.7 million into an Asset Protection Group, which Waite was associated with, beginning in November 2004 along with other possible accounts.
Prosecutors allege Asset Protection’s primary function was “to offer services to individuals trying to hide their assets from creditors.”
The DI was unable to reach the McCords when calls were placed to their publicly available numbers and to Pinnaclife — a Coralville company owned by the couple. An employee answered the phone at Pinnaclife but said the McCords were unavailable, and Darlene McCord does not come in very often.
After the alleged evasion, the McCords donated millions of dollars to the university, particularly Hawkeye athletics.
The DI previously reported the couple gave $1 million to the football program to expand the Jacobson Athletics Building in 2010, along with a separate donation of $75,000 for the then-new Beckwith Boathouse.
Dana Larson, a spokeswoman for the UI Foundation, said the McCords have paid their Beckwith donation in full, and $640,000 of their football donation with a monthly $16,000 payment.
According to a YouTube video from MyPinnaclife, the couple later appeared with Hawkeye Athletics Director Gary Barta at Kinnick Stadium and were honored during a game.
“UI athletics officials were not aware of the case against the McCords that was made public on Tuesday,” Steve Roe, the director of UI athletics communications, wrote in an email. “The McCords are longtime supporters of the University of Iowa.”
The couple also pledged a $2.3 million grant in 2008 for biomedical research from the McCord Research Foundation. Larson said the couple has changed the grant to $780,000, but because it is their gift, “it’s certainly their right.”
Larson said officials were unaware of the charges before being contacted by the DI, but the foundation did receive a subpoena last year from the U.S. Attorney in Nevada.
“It seems like this is a very rare incident; there was a incident with Peregrine Financial [a financial company that donated to foundation, but filed for bankruptcy] but I don’t know of other things like this happening during my time here,” Larson said.
Currently, none of the McCords’ donations are under investigation, but Larson said the foundation will comply with any court orders — including the possibility of refunding all or parts of their donations. The McCords also have a donor profile on the foundation’s website, but Larson said it would be only on a case-by-case basis for officials to take it down.
“We believe our donors made a donation on good faith, and we will honor that until it is found otherwise,” she said.
According to a separate 2007 lawsuit filed by the McCords and TOB Management against another company, TOB Management owns McCord Research.
The McCords are due to make their initial appearance on Sept. 19 at 3 p.m. in Las Vegas. The couple faces 20 counts each— including separate charges on conspiracy and tax evasion, and false or fraudulent tax returns.
If convicted, they face up to a total of eight years in prison and a $500,000 fine.
