Nonprofit
Imperative
…Your nonprofit browser
August
2013
The
twice-monthly newsletter dedicated to:
- exposing the crisis in nonprofit
fraud leadership…a crisis of pervasive and monumental waste, fraud, abuse,
mismanagement, and malfeasance throughout the charitable sector which
costs taxpayers and contributors tens of billions of dollars annually;
and,
- seeking reforms that will restore
the public’s lost confidence in the sector.
What’s
Included:
Skunk of the Month:
National Foundation of
America
Charity Check Up:
Inyo County
Health Services/Public Assistance
A Thought or Two:
North Canyon High
School
Nonprofit News-In Case You Missed It:
New Pride Center; Princeton
University; Goodwill Baptist Church…more
Political/Official Chicanery:
NC; RI; MI; MS; SC; IL; CA; WI; CO; WV;
KY; OK…more
What Do You
Think?
“Having spent almost
thirty years in direct service and then nonprofit management, before I joined
Charity Navigator, I was struck by the amount of questionable, unethical and
outright fraudulent practices undertaken by many nonprofit leaders. My five
years at Charity Navigator has only reinforced my impression that the problem
of nonprofit fraud as well as questionable activities is significant and the
sector has yet to take it as seriously as it should.” (Ken Berger, President & CEO of Charity Navigator, in ken's
commentary)
Skunk of the Month…
Skunk of the Month is the
twice-monthly designation made by Nonprofit
Imperative, the organization dedicated to eliminating waste, fraud, abuse
and mismanagement in nonprofits and government. The Skunk of the Month award
is given to charities and government officials who show blatant disregard for
the interests and trust of contributors and taxpayers. This month’s example is:
“They
came to do good and they did very well indeed.”
No Shame In Taking Elderly’s Assets
Richard Olive held National Foundation of America out to be a “charitable
organization,” he donated to charity only approximately $108,000 – less than ½
of 1% of the $23.6 million NFOA received. He solicited assets, including
annuities and real estate, of over $30 million from elderly individuals and
promised that, in return, the individuals would receive an “installment bargain
contract” issued by NFOA that would give them a “guaranteed payout over a
guaranteed period of time,” as well as a “generous tax deduction.”
Olive converted the assets to cash,
which he used to buy real estate, finance trips, and pay personal expenses.
Five states issued cease-and-desist
orders during the scheme, based in part on their findings that Olive was
misrepresenting NFOA’s 501(c)(3) status, and ordered him to stop selling NFOA’s
product in those states. The company was seized and ultimately liquidated by
the Tennessee Department of Commerce and Insurance.
He was recently sentenced to serve 31
years in prison and ordered to pay $5,992,181.24 in restitution to
approximately 190 victims.
A Charity Check Up:
A Lesson In Protecting Public Taxpayer Support
Inyo County (CA) Health and Human
Services Director Jean Turner readily admits that she and the department failed
in the embezzlement of $1.5 million that took place in the county’s Public
Assistance Office. She admitted that these were the department’s failings:
1.
The department was under staffed and did not have
the needed set of eyes for oversight.
2.
The perpetrator bypassed
checks and balances built in to HHS’ automated computer system.
3.
The in-house security back up failed
“We’re going to shore up, and have
shored up everything that we can think of,”
A Thought or Two:
Lack of Controls Leads to Two Charity Frauds
For two and a half years, Beverly Hodges, a former North Canyon High School
bookstore manager, embezzled upwards of $70,000 by taking cash from the
bookstore cash register. The bookstore processed extracurricular tax-credit
donations and handles transactions for fees for items such as parking permits,
athletic programs, replacement student ID cards and tests.
Her
methods may be instructive for all charity retailers as well as those that are
not charities.
·
Throughout the school
years, Hodges would hide her thefts by rekeying transactions into the cash
register, then generating new, false cash-register tapes she used to prepare
daily records — more than 300 falsified public documents in all
·
Over the years told
bookstore staff to withhold $5,349 worth of cash receipts from the deposit,
which she used to buy food and beverages for herself and the staff.
·
Hodges deposited more
than $77,500 into her personal bank account, using the cash to pay for personal
car and home-equity loans, retail purchases, groceries and restaurant
meals.
A former North Canyon
principal and an unidentified district official said they “failed to exercise
an appropriate level of oversight of Ms. Hodges’ activities. ... Moreover,
district administrators allowed the NCHS bookstore to use an outmoded
cash-register system without ensuring that cash-handling, record keeping and
depositing duties were appropriately separated and adequate controls were in
place.”
Even before Hodges’
criminal activity was suspected or discovered, all schools in the district
except North Canyon had stopped using cash registers, The software for a new transaction system was in place (at North Canyon)
but not operating properly, so Hodges continued to use the cash register
There was an overhaul.
The district installed an updated student-payment system across its schools,
allowing the district to monitor bookstore activity online. School principals
received more training in cash-handling procedures.
Two district-level employees now oversee reconciliation between school cash receipts and accounting documents, and school bookstore workers and administrators discuss internal audit findings annually.
The superintendent and cabinet are reviewing the report and will discuss it in depth in the coming weeks. They will adopt improvements beyond those already implemented as warranted,
Two district-level employees now oversee reconciliation between school cash receipts and accounting documents, and school bookstore workers and administrators discuss internal audit findings annually.
The superintendent and cabinet are reviewing the report and will discuss it in depth in the coming weeks. They will adopt improvements beyond those already implemented as warranted,
Hodges pleaded guilty to one
felony count related to theft. As part of the plea agreement with the Attorney
General’s Office, Hodges agreed to pay $72,511 in restitution to the Paradise
Valley district.
As if this was not enough,
investigators previously found that a former North Canyon athletic director and
math teacher embezzled $10,578 by depositing school-related cash and checks
into his personal bank account from December 2008 to May 2010.
Nonprofit News…
In
Case You Missed It:
1. Update: the Bronx (NY) Community Pride Center in
Longwood closed its doors earlier this year, the Bronx had no safe haven for
the lesbian, gay, bisexual, transgender, and questioning community.
Fortunately, a new LGBTQ center in the Bronx has risen from the ashes of the
old center’s demise. The old Community Pride Center closed in June of 2012 in
the wake of the Lisa Winters scandal. Winters, the former executive director of
the Pride Center was indicted last year and convicted on April Fools Day of
embezzling nearly $143,000 from the organization.
2. A state appeals
panel ruled today that charities in New Jersey must return donations given for
a specific purpose if the money will not be used as the donor intended. A
Princeton University couple seeking reimbursement of a $50,000 gift to a
no-kill animal shelter brought the case.
3. Baby boomers now give the largest share of
donations to charities, surpassing every other age group, including the
generation born before 1946, says a study just released. Boomers
make up 34 percent of the pool of donors, but give 43 percent of all money
contributed by individuals, the study found. “Baby boomers are now the dominant
source of income for most nonprofits,” says Mark Rovner, a principal at Sea
Change Strategies and the study’s primary researcher.
4. A pastor and two others--including his son--are in jail for
embezzlement
after allegedly stealing more than $66,000 from Goodwill
Baptist Church in North Carolina.
5. In New York State charities are required to
reveal where they got
their money. However, a growing number of
nonprofit organizations, spanning the ideological spectrum, are seeking
exemptions, arguing that their donors could be endangered if their names were
released to the public. Similar disputes over transparency versus privacy are
taking place in California, Maine, Minnesota and other states. One was granted
an exemption--Naral Pro-Choice New York--the prominent abortion rights group. Other groups around the nation have
also sought to shield their donors from public scrutiny. Another group, the Committee to Save New York, spent more
than $13 million on advertising supporting Governor Cuomo’s agenda in 2011 and
2012; the group went dormant as soon as the state started requiring disclosure
of donors. Ironically, Arthur Eisenberg, the New York Civil Liberties Union
legal director noted: “It’s the individual donors who shouldn’t need to take
that (abuse), and the price of their association with us, and their
participation in the First Amendment activity of lobbying, should not be at the
cost of their feeling secure and free from threats and retaliation.”
6. Under assault on various accountability
fronts, the William J. Clinton Foundation and The Clinton Global Health
Initiative are being attacked for its huge travel costs. The web of foundations
run by the former president spent an eye-opening $12.1 million on travel in
2011 alone, according to an internal audit conducted by foundation accountants.
According to previously undisclosed data provided by the Clinton Foundation,
presidential trips accounted for 13 percent of the 2010 travel budget and 10
percent of the 2011 travel budget. That puts Bill Clinton’s single-year travel
tab for 2011 at more than $1 million.
Justice
Watch
Judges, prosecutors and others have
coddled criminals convicted of charity fraud in their sentencing…and it is
rampant. All use jail overcrowding and other spurious excuses for lenient
prosecution and sentencing. Restitution is frequently ordered in lieu of
prison, but it is seldom discharged with less than 50% of the criminals even
paying one penny. This result is a free pass for the criminals. We are
watching!! (just a few examples).
1. Two former Michigan State Police lieutenants and a
civilian accomplice have been sentenced for their roles in an extensive
property embezzlement scheme. One was sentenced to 2-20 years in prison after
earlier pleading no contest to one count of racketeering, BUT his
accomplice was sentenced to three years probation and 28 hours community
service after earlier pleading no contest to one count of misconduct in office,
a five-year felony.
2. After acknowledging that he had embezzled more than
$220,000 from a car wash owned by officials of the nondenominational mega
church, the former executive pastor of Faith Church (CT) was given a five-year
suspended sentence and five years of probation on three charges of
first-degree larceny. He must pay restitution of $93,651.28 in monthly
installments and obtain counseling.
3. James Schlieve was charged with embezzling a total
of $229,315.12 from
the Zion Lutheran Church in Ashippun and
the Ashippun Lions Club. He
pleaded guilty to a lesser charge and was
placed on five years of
probation.
4.
The former administrative assistant and
bookkeeper for Local 567 of the International Union of Painters and Allied
Trades, was sentenced in U.S. District
Court for the District of Nevada to 10 months of home confinement with
electronic monitoring, five years of probation and 100 hours of community
service for embezzling funds from the Sparks-based union. She also was ordered
to pay $81,564 in restitution and a $100 assessment. She had pleaded guilty in
March
5.
Prosecutors say Jerry Bass, the national commander of Allied
Veterans of the World, faced more than 200 charges including running a
$300 million illegal lottery, money laundering and possessing slot machines. He
along with 57 Allied Veterans defendants, gave about $6 million to
veterans out of nearly $300 million in profits. Investigators said much of the
money went to charity leaders, who spent much of it on boats, beachfront condos
and cars such as Maseratis, Ferraris and Porsches.
6.
Allied Veterans’ former
commander, Johnny Duncan, last week pleaded no contest to one count of money
laundering and four counts of maintaining an illegal lottery. He will be
sentenced to probation at a later date. Another defendant, John Hessong,
was given the opportunity to enter a pretrial diversion program.
The investigation into Allied Veterans led to the resignation of
former Lt. Gov. Jennifer Carroll after
she was interviewed during the probe. She has denied wrongdoing and wasn’t
charged. (source)
We flagged these few
examples of nonprofit mischief
1.
Indian Human Resource
Center (CA) $140,000
2.
Miami Beach Community
Health Center (FL) $7 million
3.
The Arc of Ventura
County (CA) $426,000
4.
Bay High Tiger band
(MS) $12,000
5.
Raleigh Business and
Technology Center (NC) $300,000
6.
Exchange Club-Carl
Perkins Center for the Prevention of Child Abuse (TN) $82,000
7.
Blacksburg High School athletic booster
club (VA) $300,000
8.
Norristown (PA) chapter
of the Disabled American Veterans more than $40,000
9.
Mountain Mission
School (VA) $50,000+
10. Hollymead Citizens Association (VA) $73,000
11. Santa Fe Fiesta, Inc (NM) $6000
12. VCU Dental
Faculty Practice Association (VA) $137,553
13. Dougherty Elementary Parent Faculty Club (OH,
$38,000
14. Amazing Grace Lutheran Church (NV) $1.1 million
15. Alaska Veterans Outreach Boxes for Heroes hundreds
of thousands of dollars
16. Cancer Service Network Inc. (NY) $700,000
17. Saratoga at Toms River Condo Assoc. (NJ) $400,000
18. Voices for Families (NB) $1000+
19. Escondido Pop Warner (CA) Over $100,000
20. National Foundation of America (TN) $30 million
21. "Get Strong" (NM) $11,000
22. Australian Cattle Dog Rescue Inc (CA) $60,000
23. Boston Veterans Affairs Research Institute, Inc.
(BVARI) $68,000
24. Joint Technical Education District (AZ)
$300,000
25. Parent Teacher Organization at Belle River
Elementary School (MI) $30,000
26. Anaheim Police Association (CA) $300,000
27. Glendora Unified School District (CA) $350,000
28. Remington Volunteer Fire Department (VA) $40,000+
29. Mechanicsville Advent Christian Church (VA)
$80,000+
30. H.F.V. Community Center (OK)
Political/public official chicanery (just a few):
1.
North Carolina State
Bureau of Investigation agents arrested the mayor of the historic town of
Princeville charging her with 17 counts of embezzlement related to questionable
purchases made with the town’s credit card.
2.
Former Rhode Island
legislator Leo Medina rejected the state’s offer of a plea agreement in a
$28,000 embezzlement case
3.
Warren County (MS)
Circuit Clerk Shelly Palmertree has been indicted on two felony counts for a
$661,000 embezzlement by a Warren County Grand Jury.
4.
Mount Pleasant (SC)
Police Department charged Candice Bottorff, a Human Resources employee with
five years of work experience, with the an embezzlement of $52,000 and an
admission.
5.
Charlene Potts was
arrested on a warrant issued by the Cook County State's Attorney's Office, for
allegedly embezzling $900,000 from the Chicago Housing Authority.
6.
Police arrested a Rialto
Unified School District accountant on suspicion of embezzling thousands of
dollars in cash over the last two months. She is the widow of a
school principal.
7.
A former Oostburg
Wisconsin village treasurer has been sentenced to three years in prison for
stealing about $340,000 from his community. He had served as the
village's clerk and treasurer.
8.
A Montezuma County (CO)
grand jury has indicted former Undersheriff Robin Cronk on new charges alleging
he used taxpayer money to purchase about $7,400 of personal items, including
maintenance on personal vehicles.
9. The former executive director of the
Stone County Economic Development Partnership was arrested for embezzlement by
state auditor's office special agents and Stone County Sheriff's deputies. He embezzled
over $24,000, State Auditor Stacey Pickering's office said in a release.
10.
Timothy Whittington pleaded guilty. As a part
of his conviction, the charge against his wife was dropped. Timothy and
Patricia Whittington were indicted by the May grand jury in Fayette
County. Timothy Whittington faced a charge of embezzlement from the
Smithers (WV) Fire Department, where he had been the fire chief. His
wife, Patricia, was charged with Fraudulent Schemes.
11.
The former mayor of Grant
Town (WV) was sentenced Monday in Marion County Court. Robert Riggs Jr. was
sentenced to 30 days in the North Central Regional Jail and three years of
probation.
12. A Kentucky man has made the required full
restitution of the $275,000 he had embezzled from the Democratic Governors
Association.
13. An assistant principal at Trenton
(MI) Public Schools is charged with embezzlement. Bret Woodely was charged with
felony embezzlement after authorities said he took between $1,000 and $20,000
from the City of Trenton while working as a part-time seasonal employee at the
Trenton Aquatic Center.
14. A former Oklahoma State Senator was arrested in Mississippi
after he allegedly embezzled money from taxpayers. Jay Paul Gumm was the former
head of the Stone County (MS) Economic Development Partnership and is accused
of using that position to embezzle more than $24,000.Gumm, who is originally
from Durant, served in the Oklahoma State Senate for District 6 from 2002 to
2010.
15. Former Foothills Regional Airport Board
Chairman and member Randy Hullette pleaded guilty to embezzlement and witness
tampering. The US Attorney says
Hullette carried out a scheme to embezzle and steal from the airport from May
2010 to September 2012. The charges says Hullette used his access and public
authority to steal and embezzle tens of thousands of dollars in various ways
from the airport. Hullette got an accomplice to write him checks from the
airport to his business, for invoices that were either grossly inflated, for
work that was never done or for work that was completed and paid for years
earlier, the bill of information says.
16. A former township treasurer in Calhoun County (MI) charged
with embezzlement has entered a plea. Linda Lewis, 57, pleaded no contest to
embezzlement by a public official of more than $50. Calhoun County Sheriff
Department detectives alleged she took nearly $100,000 beginning April 1, 2009,
while she was Sheridan Township treasurer.
17. Covington (KY) Finance Director was charged with embezzling more
than $300,000 in public money over at least three years
18. As he began as police chief with the St. George (SC) Police
Department, he started depositing checks meant for the agency into his own bank
account, according to court papers. Since early November 2009, he cashed
$14,161.50 in checks for his own use, documents stated.
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
there is money missing.
Cites
in various media:
Featured in print,
broadcast, and online media outlets, including: Charity Navigator, Vermont
Public Radio, Miami Herald, National Public Radio (NPR), Huffington
Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal
(Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity
Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire,
Ethics World, Aspen Philanthropy Newsletter,
Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of
Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants
News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio
Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW,
National Religious Broadcasters newsletter, The Gazette, The Charity Governance
Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press,
Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit
Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit
Blog, National Coalition of Homeless Newsletter, Finance and Administration
Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan
Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog,
Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com,
Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO
Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin,
Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit
Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald,
The
HelpWise Daily, The
#Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Las Vegas Sun,
- Silence:
The Impending Threat to the Charitable Sector (Xlibris, 2011)
- Nonprofits:
On the Brink (iUniverse,
2006)
- The Michigan Nonprofit Management Manual, Governance Section
Our intent is to
keep you informed.... You may be removed from our
contact list and future mailings by emailing to garysnyder4@gmail.com with the word "remove" in the subject line.
Gary
Snyder is the author of Silence: The Impending Threat to the Charitable
Sector (Xlibris, June, 2011) and Nonprofits: On the Brink
(iUniverse, February, 2006) and articles in numerous publications. The book can
be bought at amazon.com, barnesandnoble.com, Barnes and Noble (store)
© Gary R. Snyder, All Rights Reserved, 2013
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: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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