By Jeff Gottlieb
For The Signal
In 2007, developer Larry Rasmussen and his wife, Peggy, among the wealthiest and most powerful couples in the Santa Clarita Valley, took $100,000 and established a foundation to help students pay for college. The Rasmussens weren’t necessarily looking for future scholars. You only need a 2.0 grade point average, a “C,” to apply, and there is no deadline, according to the foundation’s scholarship application form.
The Spirit Educational Foundation would turn to “friends, business associates, church folks, relatives,” for potential candidates, according to its own description of its activities in its application for tax exemption status. “Community leaders have provided names of students who require help,” it states.
But of all the students eligible for the scholarship, in the Santa Clarita Valley, Southern California or elsewhere in the world, since there is no geographic requirement, according to foundation tax returns, the five students who have received awards all belong to well-known families in the Santa Clarita Valley or Rasmussen associates. The Rasmussens’ foundation gave scholarships to friends, political allies and business associates while the couple received tax breaks for their donations to the foundation.
“You can’t set up a public scholarship fund just for people who are friends or are children of people you do business with,” said Trent Stamp, executive director of the Eisner Foundation and founding president of Charity Navigator, which evaluates nonprofits.
The children from the best-known family to receive the scholarships listed on the foundation’s available tax returns, are the son and daughter of state Sen. Scott Wilk, R-Santa Clarita, who, in August 2006, was appointed to the College of the Canyons Community College District governing board by the other trustees to fill a vacancy. Wilk’s children received a total of $50,000, according to the public records. Alison Wilk, who attended Life Pacific College, a Christian school in San Dimas, received a total of $35,000 from 2007-11. Scott T. Wilk Jr., who attended Redlands University, received $15,000 total in 2007 and 2008, according to the foundation’s tax returns.
Sen. Wilk did not return three requests to his communications director seeking an interview.
Jay Wieringa, communications director for the state Fair Political Practices Commission, said, that a public official’s child can accept a scholarship “as long as the process is fair and open to others.” FPPC regulations say that a gift to a public official’s dependent child is considered a gift to the official if there hadn’t been a relationship between the child and the donor or if the donor “has lobbied the official’s agency” or has business or may have business with the agency.
If the scholarship is considered a gift to Sen. Wilk, it exceeded the limit on gifts public officials are allowed to receive annually from a single source, a total of $390 a year at the time. That limit has since been raised to $470.
Bob Stern, co-author of the state Political Reform Act of 1974 and former general counsel for the FPPC, said he had never heard of anything like the foundation’s Wilk scholarships. “It’s certainly the most unusual scheme I’ve ever heard, and I’ve been doing this for 40 years,” he said. “The real question is why is (Rasmussen) doing this?”
Reed Maughan, an adjunct professor of accounting at California State University, Fullerton and a former partner at PricewaterhouseCoopers, said the foundation “has relieved the politician of the obligation to pay books and tuition of his children. I would love for somebody to pay for my children’s education.”
Wilk was not the only well-known official whose offspring received college aid from the Rasmussens’ foundation. Seth Mandel Winger, the son of then Newhall School district superintendent Marc Winger, received $40,000 from 2007 through 2011, according to the foundation’s tax filings. He attended Stanford University.
The Spirit Educational Foundation gave the most money, $25,000 in both 2015 and 2016, according to its tax returns, to MacKenzie Wrage, the daughter of John “Randy” Wrage, who works for Larry Rasmussen. MacKenzie is attending Cal Poly San Luis Obispo. Her father, Randy Wrage, is one of the foundation’s five directors, who select the scholarship winners.
The cost of attending Cal Poly SLO during the current school year, according to the university’s website, is $27,225, which includes tuition, room and board, books, supplies, transportation and loan fees.
Matt Lazier, Cal Poly’s media relations director, said in an email that the university sees only a “handful” of awards as high as $25,000 and that the vast majority of private scholarships range from $500 to $3,000 annually.
In the portion of Spirit’s tax return that states, “If recipient is an individual, show any relationship to any foundation manager or substantial contributor,” the return has checked “None,” next to MacKenzie Wrage’s name. It lists the recipient as “state university.”
Nonprofit experts said MacKenzie Wrage’s scholarship may violate IRS rules against self dealing, which prevent a foundation from making payments to a director’s relative. Randy Wrage, they said, is what’s known as a “disqualified person.”
“It’s pretty suspicious when it’s the child of a director,” said Ellen Aprill, a professor of tax law at Loyola Law School. “It sounds like he’s doing it for his own benefit.”
Reached at Spirit Properties, Randy Wrage referred questions about the foundation scholarship to Peggy Rasmussen.
Wrage’s daughter’s scholarships are not taxable to him, according to Maughan. Public records show Wrage has $483,193 in federal and state tax liens filed against him.
The fifth student who, according to publicly available foundation tax filings, received funding from the Spirit Educational Foundation is Audrey Sohikian. She received $1,000 in 2014 for what is listed in the foundation’s tax return as “General donation South Africa Research Project.”
Larry Rasmussen said he didn’t know anything about that foundation grant. Peggy Rasmussen said, “She went to Africa after she went to college.”
Her father, Arthur Sohikian, is president of AVS Consulting, a lobbying and consulting firm.
For many years, he has represented Santa Clarita on the North County Transportation Coalition. In addition, he sits on the board of directors of the Santa Clarita Valley YMCA, and previously sat on the Executive Committee of the Santa Clarita Valley Economic Development Corporation. Sohikian did not return phone calls or emails.
His daughter started a crowdfunding project on indiegogo.com to raise $15,000 for a four-month internship in South Africa. The site shows she raised just $2,305. That did not include the money from the Rasmussens, according to the website.
The Rasmussens are active in Santa Clarita business, community affairs and politics. Larry’s companies include Spirit Properties and Spirit Holdings, which developed Centre Pointe, among other projects. His companies currently are building Castaic High School.
Peggy Rasmussen is president of the Santa Clarita Valley Committee on Aging, where Vanessa Wilk, Sen. Wilk’s wife, is a board member.
The Rasmussens established their foundation “to help students continue their education beyond high school,” according to its tax returns. How the foundation publicizes its scholarships is unclear. Dave Caldwell, public relations officer at the William S. Hart Union High School District, said none of the counselors at the district’s 10 high schools have heard of the Spirit Educational Foundation or its scholarships.
Dianne G. Van Hook, president of College of the Canyons and chancellor of the Santa Clarita Community College District, said she had never heard of the scholarship, either, according to Eric Harnish, spokesman for the college.
In an interview in his office on Centre Pointe, Larry Rasmussen said he and his wife had been giving scholarships for 20 years. Peggy said scholarships were granted to some students who attended technical schools.
“This is a private foundation,” Peggy said. “There is no public money involved.” Larry Rasmussen: “We’ve done this for a long time and helped a lot of people.”
Both serve as trustees of the foundation. The Rasmussens declined to provide a copy of the foundation’s recent tax records and its founding documents, although IRS regulations require the foundation to make the records available to the public. The Signal obtained the records from the state Attorney General’s Office.
The Rasmussens also declined to provide minutes of foundation meetings. According to its bylaws, regular meetings are supposed to take place twice a year. Meetings to select scholarship winners are supposed to take place at least four times a year, according to its application for a tax exemption.
In addition, they would not provide a list of students who have applied for scholarships, the dates applicants were interviewed, communications to people who helped find applicants or the foundation’s conflict of interest policy. The foundation is not required to make those documents available to the public.
Saying she was not authorized to speak on behalf of Spirit Educational Foundation, trustee Elizabeth Hopp, senior vice president of the Bank of Santa Clarita, and vice president of the Santa Clarita Valley Committee on Aging, where Peggy Rasmussen is president, declined to comment whether she was involved in the selection of scholarship winners. A fifth trustee, Robert C. Lee, retired superintendent of the Hart district, could not be reached for comment.
The IRS limits a couple to giving $30,000 annually to a single person tax free, a number that has gone up over the years. However, when someone establishes a foundation, the money given to the foundation officially belongs to the state, and the foundation must follow certain rules.
“The government says if you’re willing to make a gift to a true charity, we’re willing to give you a tax break,” Stamp said. “The belief is that the organization will then make true public gifts and not just give to people who are friends of the family.”
The Eisner Foundation’s Stamp and Loyola professor Aprill said it’s not practical to establish a foundation with as little as $100,000. They advise donors to give away the money, otherwise, they said — it’s not worth the trouble because a foundation must hold meetings and pay accounting, legal and other fees.
By the time his children received the Spirit scholarships, Wilk was an up and comer in Republican politics, having worked on the staffs of Assembly members Tom McClintock and Paula Boland and U.S. Rep. Howard “Buck” McKeon. He was appointed to the community college district board in 2006 and then elected to the position. He used that as a springboard to the Assembly and then the state Senate.
His son, Scott Wilk Jr. said he interviewed for the scholarship with the Rasmussens probably in 2003. He graduated high school in 2004. The foundation was established in 2007. Wilk Jr. said he didn’t recall how he heard about the scholarship. “I know I didn’t go into the interview knowing it was mine,” he said. “Until I got the phone call, I didn’t know if I was going to get anything or not.”
The annual Statement of Economic Interests Scott Wilk Sr. was required to fill out once he joined the community college board provides a snapshot of his finances at the time. Public officials are required to list their assets in broad ranges of their value in the publicly available filings.
Wilk received $4,800 a year as a community college board member. He also received retirement and health care payments that ranged from $12,596 to $17,806.
In 2007, the first year his children received money from the foundation — $5,000 each — Wilk owned stocks and mutual funds worth $38,000 to $190,000, according to his financial statement filed for that year. In addition, he received more than $100,000 income as president of Liaison Communications, a company he valued as being worth from $10,001-$100,000.
He listed receiving $10,000 or more from four companies, Hacker/Braly LLP, Westfield Corp., Anchor Consulting and SCV SPVC Open Space.
Tuition at Life Pacific for the 2007-08 academic year, where his daughter attended college, was $10,500 and room and board cost $5,300, according to the college’s web site.
In 2009, when the Rasmussens’ foundation paid $10,000 toward his daughter’s education, Wilk reported receiving $10,000 or more from Spirit Properties, one of Larry Rasmussen’s companies. That year, he also reported his wife’s income of $10,000 to $100,000 as club director of Belcaro, an adults only community in Valencia.
However, Wilk did not list the scholarships on his Statement of Economic Interests when he was on the college board from 2007-12. He did list an $85.05 dinner that Rasmussen’s Spirit Properties paid for in December 2010.
Seth Mandel Winger, the son of since retired Newhall School District Superintendent Marc Winger, received $40,000, from 2007 through 2011, from the foundation, according to its tax filings. Seth Mandel Winger attended Stanford University.
According to the school district, the elder Winger’s total compensation was $204,283 when his son began receiving his scholarship.
Marc Winger said in an interview he was friends with Rasmussen and Wrage but his son’s award was based on merit and that he had received eight other scholarships. ”He was an outstanding student who deserved the support of community and nationwide organizations,” Winger said. “This was a large amount. That’s great.”
He said he knew nothing about competition for the award. “It was none of my business.” Winger said he posted on social media that Stanford was going to be expensive and asked if anyone knew of scholarships. Wrage, he said, contacted him and then met with his son, Seth.
A letter from Marc Winger’s attorneys to The Signal said that the last piece of business Rasmussen had with the Newhall School district was in 2001, six years before Winger’s son received the scholarship.
The attorneys wrote that the younger Winger “went through an independent process to be awarded the scholarship, and reported back on his experience and academic progress each quarter for four years. He also submitted his grades to the foundation each year for four years to verify that he remained a qualified scholarship recipient. Dr. Winger’s son further submitted to a face-to-face interview with the foundation at the end of each school year.”
Winger said that he told Newhall School district board members about his son’s scholarship.
Board member Suzan T. Solomon said Winger told board members about his son’s scholarship in a “casual conversation” and that the board had no problems with it. She said she had never heard of the scholarship and hasn’t heard of anyone else winning it.
Board member Phillip Ellis said he heard about the scholarship “in passing” from Winger and didn’t recall any discussions with the district board members about it. “He said something like his son received all sorts of scholarships and he threw out a whole bunch of entities he had gotten them from and mentioned Rasmussen,” Ellis recalled.
Oversight of the 115,000 registered nonprofit businesses and foundations in California rests with the IRS and the state attorney general. However, Stamp said the entities simply do not have the manpower to monitor them effectively, especially one with relatively small assets like the Spirit Educational Foundation.
“I’m not sure why he (Rasmussen) made the effort to set up a foundation,” said Reed Maughan, the former PricewaterhouseCoopers, partner. “It doesn’t really make a lot of sense to do what he’s doing.”
About the Writer
Jeff Gottlieb is a freelance writer. While working at the Los Angeles Times he shared the Pulitzer Prize for Public Service Reporting in 2011 for uncovering widespread corruption in the Southern California city of Bell. His stories led to the conviction of seven city officials, statewide legislation and an increased national focus on the salaries of public officials. He also received the George Polk Award, the Investigative Reporters and Editors Medal and the Selden Ring Award, among others. He previously received a George Polk Award for uncovering Stanford University’s questionable spending of federal funds when he worked for the San Jose Mercury News. Because of those stories, Congress held hearings, Stanford’s president was forced to resign and new federal regulations were put into place.
He also has worked as an editor for the Times, San Jose Mercury News and Sports Illustrated. He has written articles for Mother Jones, the Nation, Time, Rolling Stone and Los Angeles Magazine. He received a B.A. in sociology from Pitzer College in Claremont, California and an M.S. in journalism from Columbia University. Both schools have recognized him as a distinguished alumnus. He may be reached at email@example.com