It has taken 15 years for a fake legal aid "nonprofit" in Colorado but operating nationally to get caught and shut down (Click <a href="http://www.nytimes.com/2008/02/16/us/16legal.html?_r=2&sq=nonprofit&st=nyt&adxnnl=1&oref=slogin&scp=4&adxnnlx=1203365978-Wv5IBJeuSjMI7hDoulJaVw">here</a> for the New York Times story.)
No one ever asked the question, and I guess the brothers and wife operation never conducted public fundraising or grant seeking operations -- they just posed as a nonprofit without declaring otherwise to give folks in need a false expectation. In reality, they never even delivered the promised services. And noone noticed that the board was composed of all relatives?
So, had they sought grants or donations, they likely would have been caught a lot sooner -- grants and donations help define a nonprofit? One would think that failure to fulfill promises would have had them caught a lot sooner too -- but why didn't they get caught?