Charities Loss In Promise To Repay

By Gary Snyder

Restitution is bogus. Estimates from studies suggest that less than 95% of  restitutions are ever fully discharged. Moreover less than 50% of the agreements ever see one penny paid. They are seldom monitored by the court system.

Here is just one example from North Carolina where $3 million is still being sought for victims:

Embezzlement victims yet to be paid back in Neill case

By EMILY WEAVER
Times-News Staff Writer

Sam Neill pleaded guilty. He promised to pay. But more than a year later, victims of the disbarred Hendersonville attorney who embezzled nearly $3 million from estates and trusts have yet to see a dime.

The fate of what they will receive is tied up in deeds to land yet to be sold, or in at least one case, even put on the market. Depending on their purchase price and payments to others also tied to the properties, Neill’s victims may not see the full amount they were once promised … amounts they say would have helped hundreds.

“It’s really been heartbreaking. It’s sad for our community. It’s sad for our donor. It’s sad for the law profession. It’s sad for a lot of folks all around,” said McCray Benson, executive director of the Community Foundation of Henderson County.

The foundation, along with Four Seasons, a local hospice organization, lost a total of $884,000 that was intended for the charities from the Barry E. Clemo trust fund.

Clemo, who volunteered at Four Seasons many years before his death, established the trust in 2007 with the desire for his gift to be split between the organizations.

“The most sadness I feel is for Barry Clemo. He actually had a hope and dreamed what this legacy gift would be doing,” Benson said, adding that Clemo had a passion for hospice and health care. “That amount of money could have been giving health care to 60 people a year in this community.”

He said the money could have been used to detect cancer at an early stage through breast screenings, or provided mental health treatment for 30 people in need, or helped struggling patients keep their diabetes in check at the Free Clinics.

Chris Comeaux, president and CEO of Four Seasons, estimates that 1,000 patients would have been helped at Hospice with Clemo’s gift “over the course of time.” The organization lost 2 percent of its funding in the recent sequestration, which will result in the loss of $10 million over the next 10 years, he said.

Neill plans to repay $1.15 million at 8 percent annual interest through a civil settlement agreement, according to Andrew Pappas, special agent with the financial crimes unit of the N.C. State Bureau of Investigation.

The foundation and Four Seasons are not holding their breath. “We’re not counting it out, but we can’t count on it either,” Benson said.

Their restitution hinges on the sale of the old Joy drive-in theater property, now a strip mall, at 814 S. Grove St. The property is shared by Neill and his brother, and therefore any proceeds raised from the liquidation will be split before the trust will have a shot at recuperating its loss. The property has yet to be staked with a “For sale” sign.

Neill is out of jail on a $10,000 unsecured bond. He faces up to three years in prison, a $250,000 fine and no more than three years of supervised release for a federal crime he confessed to in a plea deal with attorneys last April.

He pleaded guilty to one count of federal tax fraud after prosecutors say he “understated” his income for 2008 and 2009 by $1.5 million. He owes the government $511,136 in taxes, according to court records. No date has been set for his sentencing in federal court.

The court has guaranteed the federal government a full reimbursement, ordering Neill to pay “full restitution regardless of resulting loss.”

On Sept. 17, Neill pleaded guilty to five state counts of felony embezzlement in Henderson County Superior Court.

Pending his efforts with restitution payments, Neill faces up to 84 years in prison for stealing more than $2.5 million from estates and trusts under his care. Superior Court Judge Lindsay Davis said sentencing on the state matter will occur after the former attorney’s federal case is complete.

So far, Neill has paid restitution to one of his victims, according to Pappas. He was accused of taking $55,000 in 2000 and 2001 from the Harold R. Tallmadge Trust and has paid that off, according to Papas, through a surety bond that guaranteed his legal work.

Neill was also accused of taking $247,682 from the Edna A. Davis revocable living trust fund in 2010 and has promised to repay that amount.

Neill owes the Irene F. Meinke estate $442,000 after taking from the fund in 2008, Pappas said. Initially, the indictment showed Neill took $100,000, but the successor added $342,000 to that. Although no indictment was filed because of lack of evidence for the latter amount, Neill promised to pay off the entire amount, Pappas told the court.

That restitution is tied up with the stalled sale of the old Flight Wood Grill property on the corner of Fourth Avenue and Main Street.

Neill was executor of the Ruth D. Danis estate and improperly disbursed $850,000 in 2008 to himself, Pappas said, adding that, as part of restitution, Neill filed a deed of trust and promissory note including 5 percent annual interest.

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)