WASHINGTON (FREEP) By Todd Spangler Detroit Free Press Washington Staff- Michigan's Democratic Party on Wednesday said it's filing a complaint with the IRS over Republican U.S. Senate candidate Clark Durant's salary from a nonprofit foundation, saying it violates rules prohibiting private enrichment.

The party's accusation comes days after the Free Press revealed details about Durant's compensation - which in recent years has averaged more than $500,000 - for his work on behalf of Detroit's Cornerstone Schools Association and its related charter schools. The Free Press found that Durant has been paid more than the heads of some larger local private schools and some national charter schools with more students. In other cases he made as much if not more than the heads of foundations with much larger assets.

With the Aug. 7 Republican primary fast approaching, state Democratic Party Chairman Mark Brewer said Wednesday that Durant was paid through a "sham charity" called the Genesis Foundation that "now exists for the sole purpose of enriching' Durant and his daughter, Hope Durant Loomis, who serves as Cornerstone's chief development officer. Durant, who helped found Cornerstone, has been helping to run and raise money for the school - which had about 1,500 students between three schools and two charter schools last year - for two decades.

For several years, Genesis paid Durant and Loomis for "program services," essentially covering their compensation for work done on behalf of Cornerstone, with the vast majority of the money coming from two sources - billionaire builder William Pulte and Auburn Hills investor Bruce Becker. - who contributed about $1.8 million from 2008-10. Durant received about $1.2 million in compensation from Genesis in 2008-10, according to an independent compensation study done last year for another Cornerstone-supporting organization, the New Common School Foundation, where Durant serves as president. Taken together, Durant and Loomis' compensation accoutned for 95% of Genesis' contributions, Brewer said.

IRS rules say a charitable foundation "must not be organized or operated for the benefit of private interests," especially those of a person closely connected to it - such as Durant, who created the Genesis Foundation and has, at various times, served as an officer for it. Michigan Democrats on Wednesday cited an independent lawyer they spoke to who reviewed Genesis' records and "found that Durant's actions are unlawful and fly in the face of federal laws."

"We believe this is a blatant violation of the laws," Brewer said. "The whole thing is improper."

But several of the experts the Free Press spoke to during its reporting on Durant's compensation said the question in the case of a foundation like Genesis - which exists to aid Cornerstone Schools - is less one of how much of its assets are going to pay Durant and his daughter and more one of "reasonableness." In other words, it could come down to a question of whether a nonprofit employee's compensation can be justified by comparing his duties - and how they achieve the mission of the organization - to those of officials at similar organizations. Otherwise, it could be deemed what's called "private inurement," which is illegal.

"It's all going to hinge on whether what he's being paid for by those organizations is reasonable compared to other similar organizations," said Karl Emerson, a Philadelphia lawyer who works with nonprofit organizations. He said compensation must be independently set - without involvement by the executive receiving the pay, and Durant has said he had no hand in setting his own salary.

The Free Press report showed Durant making more than other nonprofit schools in the area, as well as some much larger charter school networks, but Durant's colleagues at Cornerstone and its affiliated support groups can point to the compensation study done on his pay late last year by nationally known Frederic W. Cook & Co., which found it reasonable. The firm cited Durant's "overall role as director, lead strategist, chief fund-raiser" in justifying his compensation.

Durant told the Free Press that he got his compensation through Genesis as a means of making sure there was no question that he was not being paid through the funding he raised specifically for Cornerstone. He said Becker and Pulte had been the prime sponsors of his compensation for more than a decade and using Genesis as the vehicle for that made it clear where the funding was coming from.

Asked recently about Durant's compensation, Dana Thompson, director of the Entrepreneur Clinic at the University of Michigan Law School and an expert in nonprofit law, said using a charitable foundation primary to pay someone's compensation could warrant attention but that it comes down to paying people "reasonable compensation for the work that they're doing."

"If it's being done to support the charitable organization, it's OK, but if it's more benefit to the private individual than to the charitable organization, it's a problem," she said.

Brewer, however, said it's his understanding that, transparent or no, it's still illegal for a charitable foundation to exist largely to support its officials - even though there is little question that, if the same funding was run through Cornerstone, it could still be used to pay Durant and his daughter.

Brewer said the complaint would not address the question of whether Durant's compensation was reasonable, however. He said the Party will be launching a website - www.clarkscharityscam.com - to bring attention to the issue and said it's also considering bringing a complaint with the state Attorney General's Office.