Wednesday, September 5, 2012

Finally: After $7 million in Charity Fraud

by Gary Snyder

The behind-the-scenes orchestrator of four fake Orange County (CA) charities has pleaded guilty to charity fraud. A felon and disbarred lawyer, Joe Shambaugh, took more than $7 million via three groups — the Association of Disabled Firefighters, the Coalition of Police and Sheriffs and the American Veterans Relief Foundation. For example, in 2004 telemarketers raised $1.45 million for the American Veterans Relief Foundation. After SR-1 and the telemarketers got their share, the foundation got just $12,725. That’s a little under a penny on the dollar.

He was also involved with a fourth group not named in the plea deal, the Disabled Firefighters Foundation. All are now out of business.Telemarketers for the charities told donors, in scripts penned by Shambaugh, that their donations would help disabled cops, firefighters and veterans. In fact less than a penny on the dollar actually went to services, according to the charities’ federal tax filings and the plea deal. Under his plea deal he will serve a maximum of 60 months in federal prison.

Shambaugh spent six years in federal prison in the late 1980s and early ’90s for a bungled attempt to hire a hit man to kill a former business partner and his own father. The “hit man” was an undercover FBI agent. The boat where Shambaugh arranged the hit was wired for video.

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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