by Gary Snyder
Rep. Hal Rogers (R-KY), the chairman the powerful appropriations committee, which chooses where to dispense federal funds, has funneled more than $236 million in taxpayer dollars to a network of nonprofit groups he started , according to a new report from ethics watchdog CREW. Rogers' family members, aides, and donors "have benefited personally" from the Rogers' largess with taxpayer money. For instance, Rogers’ son, John, worked for one Kentucky company — Senture — that received a $4 million contract from the Department of Homeland Security with Rogers’s help back in 2004.
Despite signing onto the earmark ban, Rogers earmarked more than $250 million in the 111th Congress alone. He is not bashful about the earmarks. Rogers touts 8 nonprofit groups on his official website. Another nonprofit, the Kentucky Highlands Investment Corp., has ties to nearly all the other Rogers’s related groups. A KHIC official, Ray Moncrief, has given $16,000 to Rogers’ reelection campaigns, according to Federal Election Commission records
One KHIC-backed firm, Mid-South Electronics, won a $15 million contract in 2005 thanks to Rogers but later moved most of its operations to Mexico.
Rogers directly intervened in helping boost a Small Business Administration disaster loan for a marina owner who is also a donor to Rogers’ congressional campaign. That businessman, J.D. Hamilton, sought Rogers’s backing in dealing the SBA. His company also hired a lobbying firm that employed a former Rogers’s aide and whose employees have donated more than $13,000 to Rogers’s campaign or leadership PAC.
Hamilton’s company, Lee Ford’s Resort Marina, in Rogers’s district, received a $1.5 million loan from SBA after the Army Corps of Engineers lowered the water level on Lake Cumberland in 2007 in order to help save a failing dam. Hamilton has complained the lower water level hurts his business. With Rogers’s help — including a letter to SBA last July — Hamilton was able to hold a meeting with SBA officials in Rogers’ office last year. SBA then gave an additional $2.5 million loan to Hamilton’s company, and redesignated the firm as a “major employer” in the region.
Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more • Nonprofits: On the Brink (iUniverse, 2006)
Friday, April 29, 2011
Friday, April 22, 2011
Auditors Miss Drake University Fraud
by Gary Snyder
Audits often miss thieves' sophisticated attempt at fraud.
For six years, Drake University’s student accounts director was stealing from the university. Suspicious that there was malfeasance, the Drake Vice President that oversees business and finance, asked outside auditors to look at student accounts a year and a half ago. This in spite that internal auditors at Drake checking annually for proper management of university operations. Two Drake University audits failed to turn up a pattern of missing money from student accounts. Finally a recent internal investigation turned up evidence that led to police charging former Drake employee in connection with the embezzlement of $470,000 from the institution.
Audits often miss thieves' sophisticated attempt at fraud.
For six years, Drake University’s student accounts director was stealing from the university. Suspicious that there was malfeasance, the Drake Vice President that oversees business and finance, asked outside auditors to look at student accounts a year and a half ago. This in spite that internal auditors at Drake checking annually for proper management of university operations. Two Drake University audits failed to turn up a pattern of missing money from student accounts. Finally a recent internal investigation turned up evidence that led to police charging former Drake employee in connection with the embezzlement of $470,000 from the institution.
Monday, April 18, 2011
A Best Seller Charity Under Scrutiny
by Gary Snyder
Greg Mortenson has several best sellers. One is Three Cups of Tea which has sold more than four million copies and is required reading for U.S. servicemen bound for Afghanistan.
The book and his non-profit organization, the Central Asia Institute (CAI), are being called into question. CBS and 60 Minutes began investigating complaints from former CAI donors, board members, staffers, and charity watchdogs about Mortenson and the way he is running his non-profit organization.
They found there are serious questions about how millions of dollars have been spent, whether Mortenson is personally benefiting, and whether some of the most dramatic and inspiring stories in his books are even true. Mortenson says the charity took in $23 million in contributions last year - some it from thousands of school children who emptied their piggy banks to help its "Pennies for Peace" program, and some of it from large fundraisers. President Obama donated $100,000 to the group from the proceeds of his Nobel Prize.
It has only had one financial audit since its inception. Some charge the Central Asia Institute's financial statements show a lack of transparency, and a troublesome intermingling of Mortenson's personal business interests with the charity's public purpose. According to Daniel Borochoff, president of the American Institute of Philanthropy, says that most of the program spending is not to help kids in Pakistan and Afghanistan, it's actually... what they call domestic outreach where he goes around the country speaking and the cost incurred for that, things like travel is a major component of that. It is just advertising for the books. Only 41 percent of the money CAI spent in FY 2009 actually went to schools in Pakistan and Afghanistan. The financials list $1.7 million in "book-related expenses." more than they spent on all of their schools in Pakistan last year. In fiscal year 2009, the charity spent $1.5 million on advertising to promote Mortenson's books in national publications, including a full-page ad in "The New Yorker." And there are $1.3 million in domestic travel expenses, some for private jets. CAI’s travel expenses activities are integral to our mission and operations.
In 2002, his board treasurer quit, resigned, along with the board president and two other board members and said, "You should stop giving money to Greg." The IRS tax return Central Asia Institute filed last year included a list of 141 schools that it claimed to have built or supported in Pakistan and Afghanistan. Over the past six months, CBS visited or looked into nearly 30 of them. Some were performing well, but roughly half were empty, built by somebody else, or not receiving support at all.
The Central Asia Institute's board of directors indicated that Greg worked for many years for little or no compensation, but is now paid a salary by the Institute as its Executive Director.
Greg Mortenson has several best sellers. One is Three Cups of Tea which has sold more than four million copies and is required reading for U.S. servicemen bound for Afghanistan.
The book and his non-profit organization, the Central Asia Institute (CAI), are being called into question. CBS and 60 Minutes began investigating complaints from former CAI donors, board members, staffers, and charity watchdogs about Mortenson and the way he is running his non-profit organization.
They found there are serious questions about how millions of dollars have been spent, whether Mortenson is personally benefiting, and whether some of the most dramatic and inspiring stories in his books are even true. Mortenson says the charity took in $23 million in contributions last year - some it from thousands of school children who emptied their piggy banks to help its "Pennies for Peace" program, and some of it from large fundraisers. President Obama donated $100,000 to the group from the proceeds of his Nobel Prize.
It has only had one financial audit since its inception. Some charge the Central Asia Institute's financial statements show a lack of transparency, and a troublesome intermingling of Mortenson's personal business interests with the charity's public purpose. According to Daniel Borochoff, president of the American Institute of Philanthropy, says that most of the program spending is not to help kids in Pakistan and Afghanistan, it's actually... what they call domestic outreach where he goes around the country speaking and the cost incurred for that, things like travel is a major component of that. It is just advertising for the books. Only 41 percent of the money CAI spent in FY 2009 actually went to schools in Pakistan and Afghanistan. The financials list $1.7 million in "book-related expenses." more than they spent on all of their schools in Pakistan last year. In fiscal year 2009, the charity spent $1.5 million on advertising to promote Mortenson's books in national publications, including a full-page ad in "The New Yorker." And there are $1.3 million in domestic travel expenses, some for private jets. CAI’s travel expenses activities are integral to our mission and operations.
In 2002, his board treasurer quit, resigned, along with the board president and two other board members and said, "You should stop giving money to Greg." The IRS tax return Central Asia Institute filed last year included a list of 141 schools that it claimed to have built or supported in Pakistan and Afghanistan. Over the past six months, CBS visited or looked into nearly 30 of them. Some were performing well, but roughly half were empty, built by somebody else, or not receiving support at all.
The Central Asia Institute's board of directors indicated that Greg worked for many years for little or no compensation, but is now paid a salary by the Institute as its Executive Director.
Friday, April 15, 2011
Academics Have Their Hand In The Till, too
By Gary Snyder
Karen L. Pletz, a 63-year-old Kansas City, Missouri woman, was the president and CEO of Kansas City University of Medicine and Biosciences (KCUMB) from 1995 until the end of 2009. She is now facing embezzlement charges. The F.B.I. is alleging that she was also pocketing over $1.5 million by embezzlement from that university. KCUMB appears to have taken the biggest hit with nine 'leadership stipends' that generally were in $65,000 lump sum payments. Pletz is alleged to have created minutes for nine fake KCUMB executive committee meetings authorizing these payments for October 2002 until December 2009. The total sum of these payments was $1,409,500.
In addition to these payments it is being alleged that the CEO submitted fraudulent vouchers to obtain reimbursements from the university for business purposes that were in fact for her personal travel and entertainment. These vouchers included trips to visit her parents, friends and an $11,846 reimbursement for items purchased at a Vera Wang boutique at Halekulani Hotel in Honolulu, Hawaii. Pletz did not include these payments that totaled $1,074,917 as part of her income on federal income tax reports. The tax loss to the nation was at least $280,000.
Karen L. Pletz, a 63-year-old Kansas City, Missouri woman, was the president and CEO of Kansas City University of Medicine and Biosciences (KCUMB) from 1995 until the end of 2009. She is now facing embezzlement charges. The F.B.I. is alleging that she was also pocketing over $1.5 million by embezzlement from that university. KCUMB appears to have taken the biggest hit with nine 'leadership stipends' that generally were in $65,000 lump sum payments. Pletz is alleged to have created minutes for nine fake KCUMB executive committee meetings authorizing these payments for October 2002 until December 2009. The total sum of these payments was $1,409,500.
In addition to these payments it is being alleged that the CEO submitted fraudulent vouchers to obtain reimbursements from the university for business purposes that were in fact for her personal travel and entertainment. These vouchers included trips to visit her parents, friends and an $11,846 reimbursement for items purchased at a Vera Wang boutique at Halekulani Hotel in Honolulu, Hawaii. Pletz did not include these payments that totaled $1,074,917 as part of her income on federal income tax reports. The tax loss to the nation was at least $280,000.
New Yorkers-See Where Your $$ Is Going
by Gary Snyder
The New York Independent Service Operator -- the nonprofit in charge of the state's power grid—is inflating salaries, first-class travel and lobster luncheons for the fat cats in charge. Facing a possible 12 percent boost in electricity costs next month, its leadership is not hurting. Its president and CEO, Stephen G. Whitley, pulled down $875,000 in salary and $489,000 in benefits in 2009, according to its most recent IRS filings. Board Chairwoman Karen Antion, a former Port Authority executive, raked in $377,700 in pay and perks. Six of NYISO's nine board members make more than $100,000 a year -- for just 14 hours of work a week, the tax filings say. At least 20 of NYISO's 500 employees were paid more than $200,000 in 2009, up from 16 in 2007, the IRS filings show.
The New York Independent Service Operator -- the nonprofit in charge of the state's power grid—is inflating salaries, first-class travel and lobster luncheons for the fat cats in charge. Facing a possible 12 percent boost in electricity costs next month, its leadership is not hurting. Its president and CEO, Stephen G. Whitley, pulled down $875,000 in salary and $489,000 in benefits in 2009, according to its most recent IRS filings. Board Chairwoman Karen Antion, a former Port Authority executive, raked in $377,700 in pay and perks. Six of NYISO's nine board members make more than $100,000 a year -- for just 14 hours of work a week, the tax filings say. At least 20 of NYISO's 500 employees were paid more than $200,000 in 2009, up from 16 in 2007, the IRS filings show.
Monday, April 11, 2011
Fiesta Bowl: More Sad Stories
by Gary Snyder
If you can believe it, there is more on the Fiesta Bowl front...and it is not good.
With the out-of-control spending and improper practices that led the Fiesta Bowl to fire its top executive, a recent internal report on influence-peddling and spending abuses suggests that at least some board members neglected their duty of care, ignored warning signs and failed to impose checks or balances that might have prevented the scandal.
On page after page, the report describes key board members overlooking or even taking advantage of the bowl's lax controls. The report documented numerous instances in which individual board officers turned their backs on possible abuses or conducted business with apparent conflicts. Many of the failures involved financial practices.
According to investigators, the Fiesta Bowl had no rules requiring advance board approval for expenses and barely any system to verify billing claims. Even though board members believed much was "excessive" and "had absolutely no business purpose," they attended events and never challenged the expenditures.
Board members also received repeated warnings about unlawful political activity. One chairwoman was warned that the Fiesta Bowl employees were reimbursed for political contributions and a cover-up was under way and she did nothing.
The Fiesta Bowl adopted conflict-of-interest policies, but they were not enforced. The construction company of a former chairman in 2008 obtained four Fiesta Bowl contracts worth over $2 million without having to compete for the business. Another former board member and chairman received $5,000 per month to serve as liaison between the Fiesta Bowl and the Bowl Championship Series. There was no written contract. The report says two other board chairs authorized the agreement.
Don Meyers, a Fiesta Bowl founder and critic of the current board, says: "They didn't ask enough questions," Meyers said. "The excuse that we didn't know isn't sufficient."
Some board members are comfortable that current leaders are doing everything they can and should to repair the organization. This sounds quite similar to the fiasco at the Smithsonian Institution.
If you can believe it, there is more on the Fiesta Bowl front...and it is not good.
With the out-of-control spending and improper practices that led the Fiesta Bowl to fire its top executive, a recent internal report on influence-peddling and spending abuses suggests that at least some board members neglected their duty of care, ignored warning signs and failed to impose checks or balances that might have prevented the scandal.
On page after page, the report describes key board members overlooking or even taking advantage of the bowl's lax controls. The report documented numerous instances in which individual board officers turned their backs on possible abuses or conducted business with apparent conflicts. Many of the failures involved financial practices.
According to investigators, the Fiesta Bowl had no rules requiring advance board approval for expenses and barely any system to verify billing claims. Even though board members believed much was "excessive" and "had absolutely no business purpose," they attended events and never challenged the expenditures.
Board members also received repeated warnings about unlawful political activity. One chairwoman was warned that the Fiesta Bowl employees were reimbursed for political contributions and a cover-up was under way and she did nothing.
The Fiesta Bowl adopted conflict-of-interest policies, but they were not enforced. The construction company of a former chairman in 2008 obtained four Fiesta Bowl contracts worth over $2 million without having to compete for the business. Another former board member and chairman received $5,000 per month to serve as liaison between the Fiesta Bowl and the Bowl Championship Series. There was no written contract. The report says two other board chairs authorized the agreement.
Don Meyers, a Fiesta Bowl founder and critic of the current board, says: "They didn't ask enough questions," Meyers said. "The excuse that we didn't know isn't sufficient."
Some board members are comfortable that current leaders are doing everything they can and should to repair the organization. This sounds quite similar to the fiasco at the Smithsonian Institution.
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