Friday, November 7, 2008

Nonprofit Imperative
October 2008-A
What’s Included:
Skunk of the Month
Whistleblower…oops
Nonprofit News-In Case You Missed It
Red Cross government bailout; United Way, again; Smithsonian, again again;
Nonprofit Mischief
$100.17 million (2008 to date-$900.43 million)
Political Charity Chicanery
Dean, U of Louisville; NY Medical Examiner
Charity Check Up
Comings and Goings

What Do You Think?

See the Skunk of the Month…
Skunk of the Month is the designation made by Nonprofit Imperative, the organization dedicated to eliminating waste, fraud, abuse and mismanagement in nonprofits and government. The Skunk of the Month award is given to charities and government officials who show blatant disregard for the interests and trust of contributors and taxpayers. This month’s example is:
A Discovery that Leads to a Firing and Lawsuit…
A former director of Upper Des Moines Opportunity is suing the Iowa charity because she says she was fired after revealing financial misconduct there. Shortly after she began her job with the charity, she found that the group’s former director had used the organization’s funds to make unauthorized loans to individuals and businesses. The charity is not set up to make loans. The former director says she was fired without explanation two weeks after telling the group’s board about the loans. A recent investigation by the state auditor’s office found that federal grant money may have been used to make the unauthorized loans, which violated the terms of the grant. The audit also found other financial discrepancies. The organization spends about $11 million in government grants on assistance to the poor. As a result of the audit, the Upper Des Moines Opportunity officials have said they are already implementing changes at the organization to meet with the state auditor's recommendations.

Nonprofit News-
In Case You Missed It:


1. A recent audit documented more than $800,000 in questionable bonuses and in-lieu vacation and sick pay that the president of the nonprofit Southeastern Economic Development Corp awarded herself and her staff. Auditors said the compensation policies at the agency amounted to fraud. A (CA) Superior Court Judge issued a temporary restraining order to delay the $100,000 plus payment to all staff.
2. United Way, again: The United Way of Central Carolinas tells donors 85 cents of every dollar goes to charity programs, but the newspaper’s review found that only 75 cents is distributed to charities in the Charlotte metropolitan area. The investigation was conducted by an accounting expert hired by the The Charlotte Observer. The Charlotte United Way has been rocked in recent months by a controversy over the retirement benefits awarded to its leader, who resigned under pressure, along with the chairman of the organization’s board.
3. Its getting repetitive: Smithsonian inspector general said in a report distributed to Congress that spending by the former director of the Smithsonian Institution’s American Indian Museum was found to be lavish and imprudent but mostly conformed to the institution’s rules. The former director, W. Richard West Jr., spent more than $250,000 in institution funds over the previous four years on premium transportation and lodging during trips he took around the world. Mr. West has agreed to reimburse the Smithsonian.
4. In an unusual move, Congress will give the American Red Cross $100 million in emergency funding to replenish its disaster relief reserves, which were depleted as the charity plunged into debt to provide shelter, food and other services during a string of hurricanes this summer. It last turned to the federal government for help in responding to disasters in 2004, when it received $70 million in federal aid after four hurricanes hit Florida. Some critics say that by seeking federal assistance, it risks blurring its status as an independent charity. The Red Cross has spent about $260 million this year responding to natural disasters, and took out loans totaling $200 million to cover costs. The Red Cross launched a national campaign last month to recoup some of those costs. The campaign had raised $42 million. The charity needs about $60 million more to pay off its debt.
5. A new GuideStar survey shows that the proportion of charity representatives reporting decreased contributions nearly doubled between 2007 and 2008, and that almost half of participants from nonprofits that rely on end-of-year gifts expect donations to decline during the last quarter of 2008 compared to the last quarter of 2007. Some 38 percent reported increased contributions, 25 percent said contribution levels had remained about the same, 35 percent reported a decrease, and 2 percent did not know.
6. A North Platte (NB) woman who has repaid money she took from a Boy Scout troop and a wrestling club has been sentenced to prison because the judge noted that she was convicted in 1998 of forgery after being accused of embezzling from an organization at one of the district's elementary schools.
7. A nonprofit, the Central Prince George's County Community Development Corp., returned $500,000 in public money to the county after an audit found that it failed to file proper federal tax forms and that a former board member had opened bank accounts using the group's identification number without informing others on the board.
8. The much watched trial of San Francisco community leader Julie Lee saw her sentenced in September to a year and a day in federal prison for mail fraud and attempted witness tampering in connection with the same case. A judge sentence her to state probationary in mid-October for illegally diverting state money to the campaign of former California Secretary of State Kevin Shelley. She used part of $500,000 in state grant money to reimburse five donors to Shelley's political campaign a total of $125,000.
9. Criminal activity in unions is apparently a major problem. The U.S. Department of Labor's Office of Labor-Management Standards (OLMS) says the office's totals for fiscal year 2008 (which ended on Sept. 30, 2008) are 102 convictions and 130 indictments, with restitution of more than $3.2 million. It has secured court orders of restitution of more than $91.5 million since 2001. The bulk of the cases involved the embezzlement of union funds. OLMS is the federal law enforcement agency responsible for administering most provisions of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).
10. Update: The former head of Downtown Waco Inc., Margaret Mills, pleaded guilty Friday to third degree aggregate theft for embezzling money from the nonprofit economic development organization. It is believed that she may have skimmed as much as $511,000 from Downtown Waco Inc.'s coffers.
11. "These types of crimes definitely appear to be occurring more frequently around the country," Fred Engh, president and chief executive officer of the National Alliance for Youth Sports, said. Two recent examples in Florida, within the last week, are: Lake Howell Hawks youth football program ($10,000) and Casselberry Little League (up to $15,000). Lack of oversight had been a problem, said one member of the board of directors.
12. Six charities had more than $27 million invested with Tom Petters when federal authorities alleged last month that he and others had run a massive Ponzi scheme that bilked investors out of more than $3 billion. Petters is now jailed on federal fraud and money-laundering charges.
13. Update: The matter of the woman and her husband that committed suicide after St. Vincent Charity Hospital found fraud has been updated. The hospital discovered they stole $4 million in a seven-year fraud scheme--- twice the amount of the earlier estimate.
14. Update: Former Executive Director of the Alabama State Fire College was sentenced to 125 months in federal prison and ordered to pay restitution in the amount of approximately $1,400,000.00, He stole from funds benefiting volunteer firefighters, giving political friends’ children no-work jobs, and lining his pockets with public funds.

We flagged these few examples of nonprofit mischief (can’t make this up):
1. Minot Commission on Aging (ND) $77,000
2. United Steelworkers Local 14310 (WVA) $60,000
3. Millard American Legion Post (NB) $13,000
4. Yonkers South Broadway District Management Association (NY) $70,000
5. Routt County –Habit for Humanity $70,000
6. Garland County (AR) Chapter of the Red Cross $100,000
7. National Center for the Employment of the Disabled (TX) $14-120 million
8. Homenetmen Eastern Region Inc. (MA) $120,000
9. Carroll County Chamber of Commerce (VA) $50,000
10. Monelison Volunteer Fire Department and Rescue Squad (VA) unknown
11. Mississippi Valley State University Foundation $42,000
12. Traverse City (MI) Clerical, Assistants, Paraprofessionals and Secretaries Association, $15,000+/-
13. Norris Village (IL) $50,000
14. Hendrick Health System (TX) $850,000
15. Idaho Soil Conservation Commission $124,000
16. First Congregational Church (FL) $18,000
17. California State Bar Association $100,000+
18. Before and After School Services (IA) $400,000
19. Conyers (GA) Public Housing Authority $130,000
20. Snow Camp (NC) Volunteer Fire Department $11,000
21. MN dept. of Human Services $1 million
22. Bordentown Historical Society (PA) $80,000
23. N.Y. City Office of the Chief Medical Examiner $9 million
24. Marie Detty Youth and Family Services Center (KS) $125,000
25. Cub Scout Pack No. 45 (MI) unknown
26. St. Aloysius Elementary School (PA) $50,000
27. Florida Department of Law Enforcement $240,000
28. First Witness Child Abuse Resource Center (MN) $125,000
29. Edgewood Girls Softball League (RI) $10,000
30. Corn Palace Balloon Club (IA) $71,000
31. Hospice of Central Ohio $330,000
*update

Political/public official chicanery (just a few):
1. A husband and wife pleaded guilty to embezzling nearly $400,000 from Water District No. 4 (MO) in a mail fraud conspiracy. He was president of the water district. His wife served as clerk.
2. Corps of Engineers Director, Donald Smith, was indicted on two counts of embezzling and stealing where he used various government credit cards to purchase over $56,000 in items for his personal use, as well as submitting various fraudulent travel claims amounting to nearly $15,000.
3. The education dean at the University of Louisville has been indicted. The indictment alleges that Robert Felner fraudulently obtained more than $2.3 million in federal grant money from the University of Rhode Island and the University of Louisville and attempted to embezzle more.
4. Conyers Public Housing Authority executive director and her husband were indicted Wednesday by a federal grand jury for embezzling more than $130,000 from the agency and were also accused of approving bonuses for herself and using her position to pad her salary and that of her husband, the lease enforcement officer. Agency credit cards were used for vacations and meals and to buy personal items for their home, including a barn, perimeter fencing, outdoor Christmas decorations and a water slide.
5. A former supervisor of a Medicaid records division, was indicted with one count of health care fraud and 22 counts of "embezzlement in connection with health care" in federal court in Minneapolis. She submitted "dummy invoices" to an accounting system linked to the one she supervised. With those invoices, the state issued 23 Medicaid checks totaling $1,164,071.85.
6. The former director of records and the former director of management information systems teamed up to embezzle more than $9 million from the N.Y. City Office of the Chief Medical Examiner. They took money from Federal Emergency Management Agency funding intended for a computer system tracking forensic evidence and identifying victims of the Sept. 11 attacks.

Charity Check Up
In an effort to change the rules for him to run for a third term, Mayor Michael Bloomberg seems to be asking leaders of nonprofit organizations that receive his largess to express their support for his third-term bid by testifying during public hearings and by personally appealing to undecided members of the City Council. He has extraordinary leverage over the groups’ finances. Many have received hundreds of thousands of dollars from Mr. Bloomberg’s philanthropic giving and millions of dollars from city contracts overseen by his staff. Having received over $500,000 Harlem Children’s Zone president, Geoffrey Canada, vigorously endorsed Mr. Bloomberg’s legislation in testimony as did heads the Public Art Fund, which has received more than $500,000 and The Doe Fund, a homeless-services organization which has received about $150,000, according to the New York Times. Update: The City Council voted, 29 to 22, to extend term limits, which will allow Mayor Michael R. Bloomberg to seek re-election next year.
What do you think??? : gary.r.snyder@gmail.com
Don’t miss Gary Snyder’s latest contribution to the National Committee on Responsive Philanthropy website (ncrp.org)
Nonprofit Imperative gathers its information solely from public documents...some of which are directly quoted. Virtually all are in some phase criminal proceedings; some have not been charged, however.

Recent (cites) Comings and Goings:
• Donors As Beneficiaries (ncrp.org)
• Aspen Philanthropy Newsletter (October 2008; Report #149)
• Nonprofit Board Crisis, October 20,2008
• Current Affairs (September 10,2008)
• Leadership, Directors and a Troubled United Way (ncrp.org)
• Bad Charity Choice (nonprofit amiss)
• What Congressionally Chartered Organizations Have in Common: Trouble (ncrp.org)
• Nonprofit Law Blog
• Assoc. of Certified Fraud Examiners-SEM
• Nonprofit Law Blog
• How to Check Out a Job Candidate's Background (The Chronicle of Philanthropy)
• Right Man for Job Gets Top Pay (Atlantic Journal Constitution)
• Salary for Leader of Police Charity Causes Uproar (The Chronicle of Philanthropy)
• Reference Checking is a Must (ncrp.org)
• Surrendering the Charitable Sector (nonprofit amiss)
• Is Leadership Denial Feeding the Charitable Sector Crisis? (Responsive Philanthropy)
• Nonprofits: On the Brink (iUniverse, 2006)

Our intent is to keep you informed....

You may send an e-mail that will remove you from our contact list and future mailings by emailing to nonprofitsonthebrink@gmail.com with the word "remove" in the subject line.
Email: gary.r.snyder@gmail.com
6584 Pleasant Lake Court, West Bloomfield, Michigan 48322, 248/324-3700
Website: www.garyrsnyder.com

Gary Snyder is the author of Nonprofits: On the Brink (iUniverse, February, 2006) and articles in numerous publications. The book can be bought at amazon.com, barnesandnoble.com, Barnes and Noble (store) and iUniverse.com (publisher).

© Gary R. Snyder, All Rights Reserved, 2008
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