Thursday, September 26, 2013

September Edition-Nonprofit Imperative E-Newsletter






Nonprofit Imperative
Your nonprofit browser
September 2013
Follow us on Twitter: NonprofitsNews; Nonprofit Imperative Blog
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:
Kids Wish Network; W. K. Kellogg Foundation
Charity Check Up:
CA Department of Child Support Services
A Thought or Two:
Gambling: A Major Factor In Charity Fraud
Nonprofit News-In Case You Missed It:
Westfield State University…more
Political/Official Chicanery:
SC; CT; MI; PA; FL; CA; IN; MO; MS; WV; TX…more
What Do You Think?

Florida’s top charity regulator said he would ask state lawmakers to back a series of measures to crack down on nonprofit organizations that spend heavily on professional solicitors (Tampa Bay Times)
"Oversight of charities is very weak," … "We're long overdue to have better transparency and stronger consequences for bad behavior." (Ken Berger, president and chief executive of Charity Navigator, a nonprofit watchdog group (Tampa Bay Times)
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.”
Only 3% Going To Kids…No One Cares
CNN, the Center for Investigative Reporting and the Tampa Bay Times have identified Kids Wish Network as the nation’s worst charity. .It is spending $109 million out of $127 million raised ( less than 3 percent) on payments to fundraisers—including a firm related to the charity’s founder. 
Outraged?
Not a single peep from the charitable sector leadership. Not from our highest court, either…maybe an endorsement…where the Supreme Court case in 2003, Madigan v. Telemarketing Associates, concerning the telemarketing activities of a veterans charity called Viet Now, which spent less than four percent of its fundraising on actual services to veterans, that was exactly part of the argument used by the amici curiae: There was an educational function to the telemarketing pitches, and to regulate the telemarketing would be an infringement on the nonprofits’ First Amendment rights. 
Charity Fraud Hits Some of the Biggest
A Grand Rapids-area man has been sentenced to six years in federal prison for his part in the embezzlement of $850,000 from Battle Creek’s W.K. Kellogg Foundation. Two others, who were employed by the foundation in South Africa, took money intended to aid children in Africa. WKKF vice president for communications said the foundation changed some procedures including no longer funding unsolicited proposals. “Now we solicit proposals.” Assistant U.S. Attorney Timothy Verhey said that a female employee is alleged to have approved fraudulent invoices and funneled the money to two men who then sent some back to her.
The operation was uncovered during an investigation of fraudulent passports.
The money was taken between May 2006 and May 2008, when the fraud was discovered, and none was recovered.
A defense attorney says the case has brought his client a “great deal of shame.”
A Charity Check Up:
A Lesson In Protecting Public Taxpayer Support
Background checks are essential (seems like a monthly plea): A woman who embezzled $320,000 from the California Department of Child Support Services was later hired by the state’s High-Speed Rail Authority. The authority never asked about a criminal past when she was hired to make travel plans for officials.
She was fired after the authority noticed her wages were being garnished for restitution. Carey Moore spent two years in prison for stealing the money in 2007 before applying for the rail position in 2011.
She Died Thinking That Her Money Was Going Charity”
A increasing theft route from charities…from estates. Pamela Ann Oriente estate was supposed to donate to East Carolina University’s Joyner Library, Deborah Heart and Lung Center, Greenville Community Shelter, the Pitt County Human Society and the American Diabetes Association, but her attorney raided the estate of $158,000. He transferred $198,000 from a trust account he shared with his partner. He is serving a three-year federal sentence after pleading guilty to conspiracy to commit mail, wire and bank fraud and subscribing to a false income tax return for his role in a mortgage fraud scheme.
The attorney’s wife left him and moved with their two children to another state, and his home had been foreclosed.
He said he regretted hurting his family, banks and charities.
“In the beginning I felt like what I was doing was victimless, as if there was no harm done to anyone,” he said. “ ... As it turns out, the victims were all around me.”
A Thought or Two:
Gambling Is A Major Factor In Government, Nonprofit Fraud
This month, a temporary employee who was managing the Bloomfield (NM) Motor Vehicle Department stole more than $25,000 to feed her gambling addiction. 
She applied and was accepted into a pre-prosecution diversion program the San Juan County District Attorney's Office offers. To be accepted into the program, defendants must pay back half of what they stole. They have to pay the entire restitution to complete the program. Defendants can have criminal charges against them dropped if they complete the two-year program.
Not all are happy though. Bloomfield Mayor Scott Eckstein, a veteran of 20-years in law enforcement as a patrol sergeant and detective, said he thinks defendants who commit serious thefts should not only have to pay back what they stole but face criminal charges.
Understandable. The area has been plagued with a series of charity fraud in recent years.
Other recent gambling related nonprofit frauds include an employee at the Cancer Service Network (NY) who was charged with stealing $700,000 to feed a gambling habit. In the District of Columbia the executive director of Keely’s District Boxing and Youth Center pleaded guilty to absconding with $205,000. In Pennsylvania, $713,000 was lost at the Allegheny Health Network because of a gambling addiction. In Illinois, a police commander stole $140,000 to bankroll his gambling. In New York (again), an executive embezzled money intended for youth hockey to feed his wife’s addiction.
Also, fifty-seven people have been charged amid a $300 million gambling operation allegedly masked as a charity, Allied Veterans of the World.
An Australia and New Zealand study revealed that 53% of the money stolen in the sector was to fund gambling. People working in the not-for-profit sector who stole to fund their gambling took an average amount of $180,643 which is significantly higher than for any other reason. On average $45,556 was stolen by people to maintain a desired lifestyle and $13,150 stolen because of financial pressures.
Nonprofit News…
In Case You Missed It:
1.   Another donor is pulling his pledge to a university. Last month NI updated you on the pledge at Princeton University where the pledge was not used as the donor intended. Now at Westfield State University in Massachusetts a major donor has withdrawn a planned $100,000 gift saying he was “appalled at the lavish spending” by the university president. The president, Evan Dobelle, is charged with using the school’s private fund-raising arm to foot the bill for luxury hotels, limousine rides, and other high-end purchases, including a trip to Asia. A review, part of which was obtained by the Boston Globe this week, of Dobelle’s spending habits, shows that Dobelle freely mixed personal spending with official business in credit card charges of more than $180,209 billed to the Westfield State College Foundation over a 30-month period. Even after months of analysis, however, the accountant who conducted the review said it was impossible to tell whether many of the expenses were legitimate.
2.   Niger’s government has made tackling corruption a priority since taking office in 2011. It has arrested 20 doctors suspected of embezzling funds from a charity promoting vaccination in poor countries set up by the Bill and Melinda Gates Foundation. The new investigation centers on $1.5 million donated between 2007 and 2010 by the GAVI Alliance, backed by the Gates Foundation, the World Health Organization, the World Bank, UNICEF, donor governments and others. The charity, which aims to improve access to immunization in poor countries, was launched in 2000 with a $750m grant from the Gates foundation. (this approach is distinctly different from that of the U.S.)
3.  To date, the Red Cross has awarded or pledged a total of $260 million for Sandy relief and recovery efforts, or about 85 percent of the $307 million donated to the relief organization in the days and weeks after the storm hit. The Red Cross expects that the remainder of the funds will be shared among its move-in assistance program, community resiliency programs, and other local groups assisting Sandy survivors.
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.   She has been arrested and charged with grand theft after investigators say she embezzled nearly $30,000 from the Carl Hill Galloway Pioneer Club. Just months before, she was charged with grand theft and unemployment fraud after investigators learned she made over $65,000 while cashing $11,400 in unemployment checks.
We flagged these few examples of nonprofit mischief 
1.     Stephen C. Parish Jr. Memorial Fund (OH) $8100
2.     PTA at Margaret Pauline Brown Elementary School (CA) $14,000
3.     Sierra Nevada Children’s Services $6000
4.     Missouri State University bookstore $1.1 million
5.     The ARC of Prince George's County (MD) $166,000
6.     Bethlehem (PA) YMCA up to $50,000
7.     Healthcare Charities (MN) $50,000
8.     East Central Ohio Education Association $185,000
9.     Annunication Greek Orthodox Church (WI) $60,000
10.  Minneapolis Area Synod of the Evangelical Lutheran Church in America nearly $318,000
11.  Morgan Hill Downtown Association (CA) $29,000 
12.  University of Louisville Department of Family and Geriatric Medicine more than $2 million 
13.  YWCA (WA) $300,000
14.  San Francisco School Alliance (CA) $250,000 
15.  St. Vincent de Paul Society (WI) <$20,000
16.  Project Genesis (CT) $348,000
17.  Virginia FFA Foundation $722,000
18.  Big Sky Homeowners Association (CA) $900,000
19.  Whitcom 9-1-1 Employee Guild (WA) $14,000
20.  ALS ASSOCIATION (PA) $102,000
21.  Southwest Research Institute (TX) more than $500,000
22.  Parent Club (CA) $1000
23.  International Longshoremans’ Association (SC) $55,000
24.  Ashland Little League/Canton Goodman Fund  (VA) $24,000
25.  Cy Twombly Foundation (NY) $750,000
26.  Cullowhee Valley (NC) School school library unknown
27.  Midwestern Intermediate Unit IV (PA) $73,000-$175,000
28.  Norman Board of Realtors (OK) $147,000
29.  Mid-South PTA (TN) $22,000
30.  Depew Saints Hockey Club (NY) tens of thousands of dollars
31.  Victory Fellowship Church (PA) $150,000
Political/public official chicanery (just a few):
1.     Former White Knoll High School (SC) athletics director pleaded guilty to embezzling money raised to help equip sports teams. He took over $135,000.
2.     The Sheldon (CT) former assistant finance director is charged in the theft of nearly $1 million in city funds
3.     A Central Michigan University psychology professor is accused of embezzling less than $50,000 by creating fake participants in research and pocketing the money.
4.     Charges have brought to the former executive director of the Jefferson County Committee for Economic Opportunity and her daughter in connection with the theft of close to $500,000 from the nonprofit organization
5.     The former executive director of the Apalachicola (FL) Housing Authority has pleaded guilty to embezzling more than $11,000.
6.     The former Santa Barbara (CA) police business manager who pleaded no contest to embezzling from the department's parking citation fund was sentenced to 10 years in prison. Karen Flores, who worked for the Police Department for 22 years, was arrested in August 2011 and accused of stealing more than $500,000 in parking revenues over seven years. 
7.     The state of Indiana has frozen the assets of former LaPorte County deputy auditor who it says embezzled about $150,000 in public funds.
8.     The Ross Valley (CA) Sanitary District's former manager has been charged with nine felony counts including misappropriation of public funds, embezzlement and multiple counts of money laundering. He is accused of taking a $350,000 housing loan from the district that he never used for housing.
9.     Two St. Louis parks employees pleaded guilty of embezzling money from the department in a scheme built on inflated invoices.
10.  The Cole’s Point (MS) Volunteer fire department’s bookkeeper faces prison time to taking about $30,000.
11.  The National Science Foundation is a federal agency responsible for promoting science and engineering through research programs and education projects. The agency funded research and awarded Small Business Innovation Research (SC) grants to Innegrity. Its chief executive officer and major shareholder has been indicted with embezzling over $300,000
12.  The Pennsylvania attorney general's office has announced criminal charges against a former high-ranking official in the Pennsylvania Department of Public Welfare and two executives of a Philadelphia nonprofit. The former director of DPW's disbanded Bureau of Employment and Training Programs Division was charged. He allegedly enabled the National Comprehensive Center for Fathers to operate with no fiscal oversight. Prosecutors said the nonprofit's chief executive officer, and chief financial officer, misused $1.25 million in state and federal grant funding that had been designated to help fathers improve their lives for the benefit of their children.
13.  State Assemblyman Al Coutinho (D-Essex) resigned today amid a criminal investigation into his dealings with his family's nonprofit foundation. Coutinho is facing potential criminal charges involving his dealings with the Bernardino Coutinho Foundation.
14.  Mark Harris was indicted by the Hancock County grand jury this week and faces three embezzlement charges and one conspiracy charge. Harris is accused of taking more than $16,000 while he was in office.  The attorney for the city of Weirton (WV), Vincent Gurrera, said that Harris served as the Weirton mayor from 2007-2011. 
15.  A Fort Worth (TX) police officer has been fired after being accused of stealing more than $20,000 from a business bank account to pay his personal bills.
16.  Four former Bassfield (MS) officials have been indicted on embezzlement of over $300,000 following a state auditor’s investigation into allegedly fraudulent purchases
Tell us what you think and continue the tips (they are very helpful) gary.r.snyder@gmail.com
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.
Email: gary.r.snyder@gmail.com; 248/324-7000;
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






















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