Monday, June 25, 2012

A Multi-million Dollar Flurry of Charity Fraud

It is reaching epidemic proportions. In just the past three hours 4 examples of cheating vulnerable children have surfaced.

At Fired Up for Kids in Colorado the agency’s founder is charged by the district attorney with stealing $243,399.22. She has been arrested by Glendale  Colorado authorities and charged with multiple theft and fraud counts.  The hunk-laden firefighter calendars proceeds she sold were earmarked for The Children's Hospital for children burn victims.  Bank statements that allegedly show her ringing up a $700 bill to 24 Hour Fitness, charges related to a trip to Disneyland by the founder and her children, payments for the kids' private-school tuition, and cash expended on car repairs and a shopping trips to Saks Fifth Avenue, Whole Foods and Comedy Works and Nordstrom.

In New York, an upstate company improperly diverted more than $800,000 from Important Steps Inc., preschool special education program for Special-needs 3- and 4-year-olds. Billings grew from $1.6 million in 2006-7, its first school year in the program, to $5.7 million a year later. An audit office of the company’s 2007-8 records found that it had overbilled by hundreds of thousands of dollars that year. The company’s owners spent several thousand dollars on floor tiles, trees and shrubs to renovate and landscape their second home in the Poconos. The owners were arraigned on five felony charges, including grand larceny, tampering with public records and filing false documents.

An audit at Special Education Associates Inc. of Brooklyn, which was one of the city’s busiest SEIT providers this year, with 170 children receiving instruction showed that the company’s owner paid his wife $150,000 a year as his assistant executive director, while she was earning $90,000 a year as a full-time professor of speech, language and hearing sciences at Lehman College of CUNY. He pleaded guilty to defrauding the government, a felony, and was sentenced in December to five years’ probation. He also paid $610,000 in a civil settlement with the Manhattan district attorney’s office, agreed to a lifetime ban from the pre-K special education program, and sold the business. His wife is due in Bronx Criminal Court to face felony charges of grand larceny and defrauding the government.

A another company, Capital District Beginnings of Troy, N.Y., will have to pay back $831,244 in disallowed expenses. The company, which serves 800 children in a 12-county area that includes Albany, charged government $240,000 for salaries for its two co-owners, though they performed little work, auditors said.
One of them had moved to South Carolina for health reasons but still received full-time pay and a company car.

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,, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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