Friday, September 20, 2013

Politicians and Charity Money Not A Good Mix

by Gary Snyder

In testimony before the Moreland Commission to Investigate Public Corruption, some of New York’s top prosecutors called for significant changes including increased oversight of the nonprofit organizations that have been the nexus of numerous corruption schemes.

Investigations by federal prosecutors have exposed, through subpoenas and wiretaps, the seedy underbelly of Albany deals exempt from disclosure under current law, and politicians’ personal relationships with nonprofit organizations receiving state funding.

At the hearing, a hefty list of corruption cases won or currently being prosecuted was discussed:
  • Senate Majority Leader Pedro Espada: Espada was convicted in 2012 for embezzling more than $14 million in public money from the nonprofit Bronx healthcare clinic he founded in 1978, which he used to pay his campaign expenses and purchase expensive sushi.
  • State Sen. Shirley Huntley: Huntley, from Queens, is currently in a federal prison after being convicted of embezzling money from a charity she controlled.
  • Sen. William Boyland: Prosecutors have accused former Senator Boyland of, among much else, extracting a sham consulting job with the hospital nonprofit Medisys, while securing state grants for the hospital.
  • Sen. Carl Kruger: Sen. Kruger is now in prison, had a similar arrangement between Medisys and a consulting firm where he was a partner.
The case against Huntley involved member items, a process through which state lawmakers were able to give earmarked funding to charities in their district and beyond. 

Even with curbs on member items at the state level, lawmakers still exert influence over how grants are disbursed. One example: In the federal complaint charging State Senator Malcolm Smith with bribery the senator can be overheard on a wiretap talking about freely available grant funds: “Multi-modal money is outside the budget and it’s always around.”

It is suspected lawmakers used their positions as leaders on various legislative committees to influence state agencies deciding how to disburse grants, a vague process the Moreland Commission is expected to investigate.

“There are tons of photographs of legislators handing out oversize checks to community groups,” Bill Mahoney, an analyst with the New York Public Interest Research Group said. (source)

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,, 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,, CORP! Magazine, Crain’s Michigan Nonprofit,, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner,, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today,, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization),, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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