Monday, April 8, 2013

Nonprofit Fraud: The Effects of Addictions on Charities

by Gary Snyder

For years we have monitored the adverse effects of addictions on charities. Needless to say, it has been huge. In my decade of monitoring charity fraud there is a startling increase in addictions that have lead to the increasing rate of nonprofit embezzlement.

A few years ago, the Goodwill Industries, the North Central Wisconsin-based nonprofit organization’s controller was accused of embezzling more than $500,000 to satisfy a gambling addiction. The controller, who lost the money at various casinos in Wisconsin, eventually was convicted, sentenced to five years in prison and ordered to make restitution.

This scenario is not uncommon.

In the last month, the former San Diego mayor and  fast-food heiress admitted that she took $2.1 million from her late husband's charitable foundation in a decade long gambling spree when she wagered more than $1 billion.

Last month, a secretary at the Warrington Community Ambulance Service, was charged with stealing  $643,000. She attributed it to a gambling addiction. 

A few weeks ago, the treasurer of the Worcester County Teacher's association embezzled $433,000 for support her gambling addiction.

In 2011, a woman was arrested, imprisoned and ordered to pay restitution for embezzling nearly $500,000 from the Community Blood Center in Grand Chute. The employee, a former account specialist, said she took the money to feed her gambling addiction.

In Tulsa Oklahoma a director at the H.O.W. Foundation Recovery Center is charged with defrauding the nonprofit corporation of more than $1.3 million. He is accused of using checks drawn on the foundation’s bank accounts to pay personal credit card debts for almost 8 years. He maintained exclusive control over the foundation’s bank accounts and the deposit of the foundation’s daily receipts. It is alleged that the executive had battled substance-abuse problems earlier in his life before letting a gambling addiction lead him astray.

Last year, charges were filed — and then dropped — against an Appleton (WI) woman who was accused of embezzling more than $300,000 over a two-year period from Thrivent Financial for Lutherans. Prosecutors dropped the case after an agreement was reached with the company. The woman was required to pay back the misappropriated funds. She told police she had a gambling addiction and began to steal when she could no longer keep up with bills.

Previously, the executive pleaded guilty to stealing $177,000 from the Asperger’s Association of New England and was placed on five years of probation and ordered to pay restitution. Now as head of the Maynard (MA) Retirement Board he is charged with embezzling more than $521,000 from the pension fund. The thefts are attributed to an addiction to substance abuse.

Most recently, the treasurer of the Fox Valley Youth Baseball League was sentenced to two months in jail and placed on probation earlier this month for stealing $20,000 from the organization. The defendant also blamed a gambling addiction.

A Carson Valley Medical Center accounts payable coordinator got five years probation and restitution for stealing $85,000 from the institution. She had a drug, alcohol and gambling addictions.

An accountant for the South Carolina Hospitality Association pleaded guilty to embezzling $500,000 to support a gambling addiction.

In York Pennsylvania an office manager at the York Symphony Orchestra pleaded guilty to stealing $221,000 to prop his gambling addiction.

The chief financial officer at the Philadelphia Archdiocese took more than $900,000 to, in part, payoff his gambling debts.

At JaxCare in Florida an employee stole $500,000 ($800/day addiction). The charity folded as a result.

The Boy Scouts Clovis chapter in California had a treasurer that was arrested for stealing $73,000 to support a gambling habit.

For more than eight years an employee pleaded guilty to stealing $815,000 from the Colorado Association of Executives because of a gambling addiction.

The Colonel responsible handing out money to National Guard families in Arizona is charged with stealing as much as $2 million over 13 years to support a gambling addiction.

I am convinced that there are other embezzlements from charities arising from gambling losses that never make it to public view. It is insidious because the majority of gamblers who steal from their employers are otherwise law-abiding citizens

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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