Devolution Into A Sad Charity Fraud

by Gary Snyder

Over an 11-year period, Linda Duffy, a former longtime Saugus (MA) Library employee, allegedly stole more than $800,000. Duffy worked at the library; she was "entrusted with a progressively broader range of administrative tasks" and "actively sought to control certain aspects of the library's affairs, for example, handling incoming mail and processing donations by library patrons.” Instead, Federal documents allege, Duffy began depositing checks into the decoy account in November 2004 bearing memo lines such as, "library fees" or, in the case of donations, "Memory of [person's name]."

That same month, she wrote checks from the decoy account to her personal account at Eastern Bank and used the money to purchase jewelry, and pay off dental bills, car repairs, furniture and pay her home mortgage. Prosecutors allege she put a substantial portion of the money into an Eastern Bank account belonging to Duffy's daughter. Much of the funds Duffy used came from charitable donations, including $143,535 from January 2008 to January 2011 sent by Comerica Bank, as trustee for a charitable trust holding an account there. The statements from Comerica were sent directly to Duffy at the library, the court document states. Duffy also allegedly intercepted numerous donations from the GE Foundation between 2004 and 2011, and, according to the document, deceived the foundation into matching funds for donations that never actually occurred. In addition, the document states that Duffy or an accomplice also asked GE to match multiple donations allegedly made by Duffy's mother-in-law, who is the widow of a former GE employee on about 15 occasions between 2007 and 2010. 

In total, the GE Foundation sent the library more than $450,000 in matching funds, nearly all of which were sent in response to made-up library donations.

 



The scandal at the public library also prompted selectmen to move against the Library Board of Trustees, as many in town wondered how they could not have known what Duffy was allegedly doing. 

The Board of Selectmen voted unanimously last week to draft a letter to the Library Board of Trustees asking for their resignation. 

"We find ourselves in an unfortunate situation and we do appreciate the volunteers," said selectman Chairman Scott Crabtree last week. "With these situations everyone puts their time and energy into this, unfortunately, based on the findings, the board felt this was an appropriate action to restore the public confidence and trust." 








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)

Fiesta Bowl Politicians Are Cleared

by Gary Snyder

A Maricopa County (AZ) Attorney Bill Montgomery has cleared more than 30 Arizona politicians and three lobbyists of criminal wrongdoing in the Fiesta Bowl scandal, saying the state’s laws just weren’t tough enough for him to press charges.

“Despite the public’s legitimate expectations that current laws ensure a reasonable degree of open and honest government, Arizona’s statutes governing receipt of gifts and reporting requirements fall short of meeting those expectations,” Montgomery said.

Leading the list of politicians who benefited from the college football game was former state Sen. Russell Pearce, who reportedly took about $40,000 in tickets and trips over several years. Pearce came to national attention in 2010 for being the chief sponsor of Arizona’s harsh immigration law. Last month, he was voted out of office in a recall election, in part because of his role in the Fiesta Bowl scandal.

Montgomery isn’t the only one who’s been investigating the Fiesta Bowl. A federal grand jury last month indicted a bowl employee on suspicion of making illegal campaign contributions to various Arizona politicians. The indictment revealed that other, unnamed people were also under investigation but no one else has been charged so far.

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)

A Note From Gary Snyder (Nonprofit Imperative)

Each year we give an update on the status of charity fraud.

Fraud in 2011 has unfortunately been consistent with previous reports. It continues to flourish… unabated. The New York Times had a story, in 2008, about a startling academic study that indicated that over $40 billion was stolen from charities. In mid-2011, the Inspector General in Texas said that amount had risen to $51 billion…a 27% increase, in just three years. That same trajectory continues based on the data collected for Nonprofit Imperative. Nonprofit Imperative has documented upwards of 5200 incidences of charity fraud.

In 2009, we saw a significant jump in such occurrences as well as a 50% rise in the amount of money stolen. In 2010, Nonprofit Imperative data showed that path had not subsided with a 25% increase and about $2 billion stolen from those to whom the money was intended to go. In 2011, almost $2.7 billion had been embezzled. This is 30% increase in malfeasance from the previous year. Because the documentation of these frauds are taken solely from public documents, members of the Association of Certified Fraud Examiners has suggested that this represents only 5-10% of the total amount of charity malfeasance.

                                              _______________________________

Postscript:  Practically every statement that I have shared in the past decade has been explicitly or implicitly been directed toward the betterment of philanthropy…and there have been many.

I have written or worked on well over a hundred articles; assisted in documentaries, television and radio shows as well as movies; published a twice-monthly e-newsletter for half-a-decade (the equivalent of 2-3 books or 1050 pages); authored two books; lectured; consulted; assisted in numerous thesis on fraud; and served on over 25 boards (many in a leadership capacity).

I have proffered practices to force the acknowledgement and discussion of some the charitable sector’s most pressing problems, while seeking at least minimal change. I readily acknowledge the results could have been better.

Needless to say, I have received considerable pushback. In truth, some was appropriate. But more often than not, I have found incredible support from people, mostly unknown to me, who coaxed me to carry on or just do better.

We thank you for your support.                                                   

I wish you a Happy Holiday

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)

Charity Fraud: Money for the Children’s Hospital Burn Unit Taken

by Gary Snyder


She used the nonprofit, Fired Up For Kids,  to solicit donations through the sale of calendars to raise money for the Children’s Hospital Burn Unit. Shortly after the nonprofit was formed Kristin Hamling, president and sole board member, began using its accounts and assets for personal uses, including gym memberships, airline tickets, and at nail and hair salons, according to the attorney general's complaint. Hamling resigned from the organization but refused to turn over to a successor organization the intellectual and physical property of the organization, including its bank accounts and inventory. The Denver (CO) District Attorney’s office won’t say how much money was allegedly stolen. A former volunteer with the group estimates the theft in excess of $50,000.












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)

Who Was Watching Out for the Charity Sector’s Best Interests?

by Gary Snyder

Rick Cohen of Nonprofit Quarterly reminds us that when there was considerable infighting regarding the charitable sector‘s tax deduction, the nonprofit sector was not attentive  to what was happening on other fronts. There were important changes in the Omnibus Spending bill. It seems that there were considerable cuts that were missed by those that are charged to represent the charities best interests.

Some that were picked up by Cohen:

§  cut in the Weatherization Assistance Program (WAP) by 60 percent, the lowest funding level since 1977;

§  reduction the Low-Income Home Energy Assistance Program (LIHEAP) from $4.7 billion in FY2011 to $3.5 billion in FY2012;

§  spending was raised the Pentagon’s budget by 1 percent, but cut the budget of the Environmental Protection Agency by 6 percent which will affect nonprofits;

§  spend will knock 100,000 students out of one or another aspect of the Pell Grant program; spending was  reduce the number of years a student can use Pell Grants from nine to six years.

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)

Charity Fraud Bad Guy Wants Out of Prison

by Gary Snyder

He pleaded guilty to embezzling more than $1.8 million from Hartville Homes Inc., a nonprofit organization that operates residential care facilities and other services for the mentally disabled. Court records show Rohr stole the cash between 2001 and 2007 while serving as Hartville Homes’ chief financial officer. Rohr also embezzled $100,000 from St. Barbara Catholic Church in Massillon and $21,769 related to rental property owned by the church while serving as the church’s financial advisor. In a separate case, Rohr was convicted in Summit County for felony theft in connection with his former Cuyahoga Falls-based business, Falls Consumer Credit Management. He now wants an early release after having served three years and three months of a nine-year prison term he received in October 2008. What do you think?  (link)    

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)

Fundraising Nets 37% For Charities, NY AG Says

by Gary Snyder

According to the New York attorney general’s Pennies for Charity, Where Your Money Goes: Telemarketing by Professional Fundraisers, in 2010, an average of just 34.6 cents of every charitable dollar raised by these professional telemarketing companies in Western New York actually went to charity. By comparison, just 36.9 cents per dollar go to charities statewide. Many charities across the state received even less – and in 61 of the 564 telemarketing campaigns, the charities actually lost money. In total, 63 percent, or $157 million, of the funds raised by 81 telemarketers in 2010 was paid to fundraisers for fees and/or used to cover the costs of conducting the campaigns. By comparison, charities retained 37 percent, or $92 million, of the total funds raised in the campaigns. (link)

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)