Wednesday, March 25, 2009

Nonprofit Imperative

…. your nonprofit browser
February 2009
What’s Included:
A record amount of misdeeds in one month: $208.795 million
Skunk of the Month
Nonprofit Stimulus problem?; Religious Compensation
Nonprofit News-In Case You Missed It
Nonprofits Wield a Political Whop: Another Misconduct Tip-line; Large Charitable Gifts Dropping
Political/Official Chicanery
Alderman; PA state Senator; Jailer; GSA Accountant; School CFO; NASA Theft
Comings and Goings
What Do You Think?
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 Provocative Letter
Citing a New York Times story that "theft and embezzlement in the nonprofit sector was over $40 billion in 2006 alone”, Mark Fitzgibbons, President of Corporate and Legal Affairs at American Target Advertising, Inc. sent a letter to, the President of the National Association of State Charitable Officials (NASCO), the umbrella organization for attorneys general and other state officials which regulate nonprofit organizations. He noted, “… nonprofit organizations will now receive untold billions of taxpayer dollars under the hastily prepared, controversial American Recovery and Reinvestment Act (ARRA), otherwise known as the Stimulus Bill. This unprecedented, rushed federal spending on nonprofit organizations is likely to result in fraud and abuse both by recipients and government dispensers of funds in proportion to the dollars spent, which likely means fraud will be at record-breaking levels.”

What do you think?
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One Way to Look at It
A jury found the Irish Catholic priest guilty of embezzling hundreds of thousands of dollars from the collection plates at St. Vincent Ferrer Church in Delray Beach and using the money to support a lifestyle that would have worn out rock stars and NBA players. He used church money for trips to Las Vegas and the Bahamas. He used it to buy real estate, furniture and jewelry. He used it to gamble and entertain women. He suggested that he might have lived so large to deal with the stress of the job, that he turned to babes, blackjack and Vegas because he was tired of hearing the faithful complain about their problems. He took money from a slush fund - which the Irish media dubbed a "lush fund" - and destroyed financial records. He testified that the stolen money was "small compensation" for his service. He asked a jury to accept that his behavior might have been immoral but not illegal.

Nonprofit News-
In Case You Missed It:

1. According to a study by the Campaign Finance Institute, an academic research group affiliated with George Washington University, nonprofits, known as 501(c) 4s and 501(c) 6s, spent a total of nearly $200 million in the 2008 campaign cycle. The total tripled the amount those types of groups spent in the 2004 presidential campaign cycle and is only expected to grow in the 2010 election cycle.
2. The Catholic Diocese of Cleveland announced that a financial-misconduct hot line has been established to report any concerns about suspected financial wrongdoing. The decision to utilize the system in Cleveland was, in part, based on the tax-fraud convictions of the diocese's former chief legal and financial officer and former diocesan accountant. According to the evidence presented in the Cleveland federal court, Smith directed $17.5 million in church business to the accountant between 1997 and 2003. The accountant then made payments, characterized as kickbacks, to two companies owned by Smith. The archdioceses of Chicago, Milwaukee and Cincinnati are using a similar system. (see next 3 items)
3. In response to preventing future cases of financial embezzlement, after a priest in Darien, Conn. embezzled $1.4 million from his parish, legislation that would take financial control of parishes away from the bishops and give governing authority to boards made up of members in each individual parish. Because of public pressure, hearings were cancelled.
4. The Rev. Charles Newman, former president of Archbishop Ryan High School, pleaded guilty to felony theft and forgery charges in connection with his having stolen what prosecutors say is $900,000 from the school and his order of Franciscan Friars. He allegedly gave $54,000 of that money to a former student whom he is accused of having sexually abused. He did not face criminal charges on the alleged sexual abuse because the complaint surfaced after the statute of limitations had passed.
5. A jury in West Palm Beach convicted a priest of stealing from his church. He used the money to finance a lavish lifestyle that included trips to the Bahamas and Las Vegas, jewelry and home furniture. Father Guinean will remain jailed until his March 25 sentencing.
6. Charitable gifts of $1-million or more from individual donors fell by 33 percent in the last half of 2008 compared with the same period in 2007, according to a new analysis of big gifts by researchers at the Indiana University Center on Philanthropy
7. Serious problems with accounting procedures in Arlington (WA) opened the door for the city to be a victim of embezzlement which led to a former city finance department admitting that she wrote herself dozens of city checks worth more than $1.3 million.
8. An Associated Press investigation shows that the Army Emergency Relief Fund grew into a $345 million charity but spent only $64 million (about 12 years of reserves). In its defense, it says that Charity Navigator gave it a 4 star rating for three consecutive years.
9. Two money managers who oversaw investments for Carnegie Mellon University and other institutions were arrested on charges of running an estimated $114 million, decade-long swindle. The pair, both former part owners of the New York Islanders National Hockey League team, are accused of using client money as "their personal piggy-bank" to fund lavish lifestyles.
10. Former officials of El Paso’s National Center for Employment of the Disabled are accused of stealing tens of millions of federal dollars appeared in federal court Dodgers Dream Foundation build 42 youth baseball fields and a $10-million gift to help build the Children's Museum of Los Angeles (CA. In the five years from 2001 to 2006 covered by the indictment, NCED received more than $700 million from the government as payment for the manufacture of military uniforms, chemical protective suits, boxes and cardboard products for the U.S. Postal Service.
11. A former finance executive assistant of Mercy Medical Center Foundation, an employee for 28 years, is accused of embezzling more than $200,000 from the hospital over a period of three years. She was charged with first-degree theft
12. More foundation leaders have started counting their expenses as charity because total donations fell short of the charitable spending level the federal government required
13. A federal grand jury has returned an indictment charging Capt. Michael Dung Nguyen. It alleges that between April 2007 and February 2009, while deployed to Iraq, he stole in excess of $690,000 in U.S. currency that was entrusted to him. He attempted to launder the stolen money by purchasing a 2008 BMW and a 2009 Hummer H3T, in addition to purchasing computers, electronics and furniture.
14. Best known for his charitable activities, including a $5-million pledge to help the), Bruce Fred Friedman, is accused of diverting investors' money to himself and to a charity he founded and operates. He spent much of the money on luxuries that included a $6.5-million Malibu home, vacations, cars, jewelry and designer clothing. The SEC said Friedman gave at least $1.8 million of investor money to his charity, the Friedman Charitable Foundation. Friedman was previously convicted of grand theft and sentenced to 40 months in state prison for stealing $300,000 from Avery International Corp.
15. Fraud and abuse helped boost Medicare spending on home health services 44% over five years as some providers exaggerated patients' medical conditions and others billed for unnecessary services or care they did not provide, a Government Accountability Office reported. The GAO reviewed home care payments from 2002 to 2006, when spending reached $13 billion.

We flagged these few examples of nonprofit mischief (can’t make this up):
1. Battle Ground High School (WA) Grad Night Committee $11,000
2. Diversified Industrial Services (WA) $110,000
3. Lincoln Park Fire Department (MI) $2000
4. Pleasant Valley (CA) Sports Boosters Club $60,000
5. Shingleton Recreational Club (MI) thousands
6. Big Brothers Big Sisters chapter of Defiance, Henry and Paulding counties (OH) $15000
7. Bordentown Historical Society (PA) $80,000
8. Union County West End Fire Company (PA) $38,000
9. Sioux Empire Fair Association (SD) $383,000
10. Port Jervis Youth Football League. (NY) $10,000
11. Rocky Ripple Community Association (IN) $60,000
12. Washingtonville Soccer Club (NY) $130,000
13. Farmington (NM) Civic Center Foundation $375,000
14. Fremont (MI) Area Community Foundation >$20000
15. St. John’s College of Nursing and Health Sciences (MO) $500,000
16. Congregational Church of South Dennis (MA) $650,000
17. Northshore Supporting Organization (IL) $3 million
18. Lucile Packard Foundation for Children's Health (CA) $350,000
19. Historic Savannah Foundation (GA) $75,000
20. Lehigh Valley Community Foundation (PA) $500,000
*update

Political/public official chicanery (just a few):
1. Former Norwich alderman has pleaded no contest to embezzling from two nonprofit organizations--- $4,650 while serving as treasurer for the Norwich Little League and took $10,567 from Norwich High Stakes Bingo, Inc., a veterans organization
2. A jury found former state Sen. Vincent Fumo, a legendary power broker in Pennsylvania politics, guilty of 137 criminal charges. He once boasted of using "OPM" — other people's money — and prosecutors said he used state employees to support his lavish lifestyle. He defrauded the South Philadelphia nonprofit, Citizens' Alliance for Better Neighborhoods, by getting it to pay for thousands of tools, consumer goods and other items. His former aid that headed Citizens' Alliance was convicted in the conspiracy. Fumo also was also guilty of defrauding the Independence Seaport Museum, where he was a board member, by using its luxury yachts to take overnight cruises.
3. A former chief of a South Carolina jail has been sentenced after pleading guilty to an embezzlement charge. He will serve 18 months in prison. He asked the judge for a chance to repay the $360,000 he was accused of embezzling from the Dorchester County jail.
4. Former Canyon Lake (CA) Councilman Frank Kessler pleaded guilty to embezzlement
5. A payroll technician for the city of Colton has been arrested and charged with one count of embezzlement in connection with an estimated loss of $28,000. He resigned.
6. An accountant for the General Services Administration admitted he was an embezzler of $600,000
7. East Nicolaus school district's former chief financial officer has been sent to jail for embezzlement of $23,000
8. The former chief financial officer of Lincoln (NJ) is charged with stealing $10,000. He resigned and was arrested and is out on bail.
9. While working for the John Kerry presidential campaign, and later at a nonprofit group, Shane Tessimond stole checks and gave them to an associate, who deposited the money. He also is accused of opening a credit card using a co-worker's stolen social security number. Prosecutors say the entire scam led to the theft of more than $137,000.
10. A NASA official steered $9.6 million to a consulting firm at Mississippi State University where he was the principal consultant. He was NASA’s chief of staff and liaison to the White House.
11. A former employee of the year in the Durham County (NC) Sheriff's Office pleaded guilty in Superior Court to embezzling $113,000. His sentence: probation for two years.
12. A former policy director for the U.S. House of Representatives Committee on Transportation and Infrastructure, and a legislative assistant to a U.S. senator, were indicted for an all-expenses-paid trip to Game One of the 2003 Baseball World Series. Included was a round-trip commercial airline travel to and from New York City; use of a chauffeured sport utility vehicle for transportation while in New York City; a ticket for each official to Game One of the World Series; a souvenir baseball jersey for each official; as well as lodging, meals, drinks and entertainment at a strip club. All have pleaded guilty.
13. While acting as its treasurer, Gresham Village (WI) trustee stole nearly $30,000 from Cashiers Who Care, a nonprofit.

Charity Check Up:
For more than half a century, charities have been barred by federal law from making contributions to political campaigns. A review of campaign-finance and federal tax records by the New York Times shows that at least 81 tax-exempt charities have given contributions to legislative candidates since 2005, with some organizations giving more than once to multiple candidates. The donations — by museums, churches, hospitals, even Little Leagues and soccer clubs — underscore the lack of oversight of lawmakers’ fund-raising practices in the state. Asked about the contributions, legislators and charity officials offered several responses, including apologies, suggestions of clerical errors and defiance. Some of the contributions were given as the cost of admission to political fund-raisers, which some donors said they did not realize it counted as campaign contributions. On the other hand, Assemblywoman Rhoda S. Jacobs, a Queens Democrat, received contributions from several nonprofits, according to the records, including Maimonides Medical Center, which gave her campaign $2,500 in 2006. That summer, Ms. Jacobs secured state financing to help Maimonides buy a CT scanner.

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 cited are in some phase criminal proceedings; some have not been charged, however.

Recent (cites) Comings and Goings:
• Is CEO Pay at Angel Food Ministries Excessive (Atlantic Journal Constitution)
• Where’s the Ire? (ncrp.org)
• Five Rivers leaders guilty on six counts (The Sun News)
• Angel Food chief has led up-and-down life (Atlanta Journal Constitution)
• The Best Charitable Watchdog Going Kaput (ncrp.org)
• Five Rivers leaders guilty on six counts (The Sun News)
• Angel Food chief has led up-and-down life (Atlanta Journal Constitution)
• Our Students Deserve Better (ncrp.org)
• National Religious Broadcasters March 7,2009
• Siphoning Off Sacred Funds (ncrp.org)
• The Accountants and Regulators Role in the Current Collapse (ncrp.org)
• Veterans Whine as Executives Dine (ncrp.org)
• Government agency Monitoring: Indifference and Hush (ncrp.org)
• The Sun News, Atlanta Journal Constitution, Ethics World, Aspen Philanthropy Newsletter, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, National Coalition of Homeless Newsletter, , MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org,
• Nonprofits: On the Brink (iUniverse, 2006)
The Michigan Nonprofit Management Manual (Governance Section) (3,000 distribution)

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, 2009
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