Tuesday, November 20, 2012

Nonprofit Fraud: Are Colleges and Universities Worthy of Your Support?

By Gary Snyder

My exploration as to the magnitude of college and university fraud was precipitated when I learned of a former St. John’s University dean committing suicide after being convicted of stealing more than $1 million from the university. In the wake of the allegations, authorities said that she might have killed her husband over a decade ago. 

Although most are not as interesting as the St. John embezzlement, the number of instances of higher education fraud is overwhelming.  It is basically an epidemic. Many of the examples are taken from the twice-monthly e-newsletter, Nonprofit Imperative.

Consider this as a partial list of embezzlement cases. This sampling of only 20 thefts totals more than $28 million.

  • ·      Two North Carolina Central University administrators were charged when they were caught diverting over $1 million from a state program.
  • ·      Drake University’s student accounts director was stealing more than $470,000.
  • ·      A former Penn State Professor was charged in a $3 million federal research grant fraud that took place for over a 5 year period.
  • ·      A coordinator of the equine industry program at the University Louisville pleaded guilty to stealing $463,636. She was sentenced to 37 months in prison.
  • ·      An administrative manager at the Vanderbilt University Law School pleaded guilty to a theft of $535,000 and was sentenced to 22 years in prison.
  • ·      An accountant for the Mississippi University for Women was charged with embezzling over $30,000.
  • ·      Five former employees at the University of North Texas, including the College of Information budget officer, were charged with stealing more than $75,000 from the university.
  • ·      Former Portland State University vice provost pleaded guilty to stealing more than $4500.
  • ·      A project manager at Vassar College is accused of embezzling almost $2 million over a 5 year period by setting up a phony construction company and charging the college for work not performed.
  • ·      Former president, CEO, and trustee of Kansas City University of Medicine & Biosciences embezzled more than $1.5 million over a 5-year period.
  • ·      Former residence life employee at the University of Montana is accused of embezzling over $300,000 over a seven-year period.
  • ·      A former administrative assistant at the University of Vermont Extension program is accused of embezzling  $48,800.
  • ·      An office manager at the New Jersey City University pleaded guilty to embezzling $502,000 from the university student government organization.
  • ·      Electronic transfers were made at Columbia University in the amount of $4.5 million by a former employee.
  • ·      Former head of the Department of Surgery at Duke University embezzled $267,000.
  • ·      A former vice president of finance at Iona College pleaded guilty to embezzling $1.2 million.
  • ·      Former community outreach coordinator at Virginia Commonwealth University pleaded guilty to embezzling more that $144,000.
  • ·      Former director of food services at LaSalle University (PA) embezzled over $5 million over at least a 20-year period.
  • ·       An accounts payable clerk at Naropa University is accused of stealing nearly $600,000 over a two-year period.
  • ·      At Oklahoma State University a university’s chemistry department embezzled $80,000 over nearly a two-year period. She filed bankruptcy a month before claiming more than $150,000 in debt.
Watch out before donating. Make sure that you are confident that the charity that you donate to is honest. Exercise due diligence:
  • · ensure the charity is effectively governed; is it transparent, accountable and fiscally responsible?
  • · go to GuideStar, if available; and review the charity’s IRS 990 form; look at other watchdog websites such as Charity Navigator.
  • · go to the charity’s website and scrutinize the annual report and try to see if there are conflicts of interest (such as family members on the board);
  • · check the financial statements both at GuideStar and at website;
  • · examine to see if programs are in sync with organization’s mission;
  • · ask if the agency has internal financial controls in place to avoid fraud and misapplication of funds.

A thanks to Christopher Marquet of Marquet International for information used in this article.

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 (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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