Wednesday, June 5, 2013

Where Is The Leadership In Catching These Nonprofit Fraudsters?

by Gary Snyder


As we start gathering examples of charity fraud for the early June edition of Nonprofit Imperative, three of the first ones we found shared a similarity. All were relatively large examples of fraud.  

The Michigan Workers' Compensation Placement Facility lost $2.6 million to two criminals that pleaded guilty. Another was at the Monterey Bay Aquarium Research Institute where a former payroll employee embezzled about $800,000. The third involved the administrator of Muncie's Union Chapel United Methodist Church who took more than $130,000.  

The remarkable issue that all shared is that it took over 11 years to uncover the first one, 7 years for the second and nine years for the third. 

And we must not forget the embezzlement case, in last months Nonprofit Imperative, with the longest reported duration (over 27 years) involving Sharon Ruth Broadway, of Toledo, Ohio, who issued checks to herself or for her benefit, embezzling a total of $2,598,000 from United Catholic Credit Union in Temperance, Michigan. She had been employed as “manager, secretary, board member, and sole employee,” according to prosecutors.

Where were the internal controls? Where were the auditors? Where was the governing structure to monitor each organization? Much to think about!



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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