Nonprofit
Imperative
…Your nonprofit browser
October
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:
Fraud Examiner Caught In A
Fraud
Charity Check Up:
Metro. Council on
Jewish Poverty; CEO Compensation
A Thought or Two:
China Donations
Down; DC Assault Director
Nonprofit News-In Case You Missed It:
Forbes Insight Survey; Girl
Scouts of USA…more
Political/Official Chicanery:
CA; IL; VT; NY; NY; WA; MI; WV…more
What Do You
Think?
In public 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.
Nonprofit organizations are experiencing an upsurge in unethical
practices on par with those found in the for-profit sector, according to the
Stanford Social Innovation Review.
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.”
Fraud Examiner Caught In Charity Fraud
She was a fraud investigator with the Department of Work and Pensions in
Wales. She said she had separated
from her childhood sweetheart after realizing he was guilty of defrauding HM
Revenue and Customs through his charity, The Welsh Independent School of
Climbing and Mountaineering, which was set up to help disadvantaged young
people in the South Wales Valleys.
Elizabeth Lewis denied
being involved in the fraud with her husband. She told the jurors she was busy
with her job and with her own charity that builds schools in Uganda.
The jury thought
otherwise and found her guilty of all four charges. The money in question went
into a joint bank accounts in the couple's names.
A Charity Check Up:
“The Scale and Duration Of The Nonprofit Fraud Is Breathtaking”
“"It's always sad and shocking
when we discover that someone used a charity as their own personal piggy
bank—but even more so when that scheme involves someone well-respected in
government and his community,"
said Attorney General Eric Schneiderman, who led the investigation along with
state Comptroller Thomas DiNapoli
The
former head of the Metropolitan Council on Jewish Poverty and a longtime friend
of Assembly Speaker Sheldon Silver, was arraigned on charges he and others
stole more than $5 million from the organization over 20 years. William
Rapfogel is accused of conspiring to inflate insurance payments made by his
organization, while pocketing the difference in cost. He allegedly received
approximately $1 million in envelopes filled with cash, or via checks for
personal expenses, such as contracting work on one of his homes. Prosecutors
said he also directed an insurance company involved in the scheme to make
donations to several political campaigns in the hopes of obtaining favorable
legislation for his group. He was fired from his position in August. "The scale and duration of this scheme are
breathtaking," Mr. DiNapoli added.
Mr. Rapfogel received
hundreds of thousands of dollars in cash from the Century Coverage employee, most
of which he kept at his home, the state alleges. One kickback was delivered in
the form of a $27,000 check for a contractor working on Mr. Rapfogel's home.
More than $400,000 in cash was recovered from his home over three days in
August, after the criminal investigation was first publicized.
Is Charity CEO Compensation Too High?
CEO compensation has become such a hot-button topic that
several states ---including New York, New Jersey, Florida, Massachusetts, New
Hampshire and Illinois --- have considered regulations that place limits on
compensation for charity CEOs. And the IRS, the entity responsible for
regulating charities at the federal level, continues to prioritize CEO
compensation as one of its main areas of focus in uncovering fraudulent nonprofit
practices.
Charity Navigator has collected a wealth of data on CEO
salaries. Their analysts have examined tens of thousands of nonprofit financial
documents, giving them insight into the real-world financial practices of
America’s mid to large sized charities. It will help donors,
policymakers, charity Boards and others understand how leadership pay varies by
the charity’s location, size and mission.
Its all here
Its all here
A Thought or Two:
China Donations Down Because Of Scandals
The
donations from home and abroad made in China were down for the second year
according to the China Charity and Donation Information Center (CCDIC)
report.
The
center's statistics showed that the total amount donated is down 18.1 percent
from the previous year. An official with
the Ministry of Civil Affairs attributed the dip, in part, because of the
lingering "public trust crisis" toward the country's charity sector.
The reputation of charity groups, especially the
Red Cross Society of China, took a major hit in 2011 when a woman calling
herself Guo Meimei used social media to claim she managed an organization under
the charity and openly flaunted her wealth and extravagant lifestyle.
The incident and ensuing scandals among its local
branches over the past year have triggered public concern about embezzlement
and improper management within the charity.
Why Is This Guy Watching Over Our Kids?
D.C. Assault youth
basketball program co-founder Curtis Malone’s appeal for bond was denied
in U.S. District Court. He will remain
in jail until the completion of his trial on federal drug trafficking
charges. DC Assault Inc. is a non-profit, 501 (c)(3) organization
dedicated to providing young athletes (ages 8-17) with the opportunity to
develop their basketball talents.
In her ruling, Judge Ellen S. Huvelle said, “there is credible evidence that [Malone] is a large-scale supplier” after prosecutors alleged he played a leading role in a drug conspiracy that may have spanned the entire East Coast.
Prosecutors wrote, “Malone’s drug dealing activities have been extensive and long-standing, contrary to the picture of him as portrayed in letters from his friends and his family.” DEA investigation suggests Malone was part of a network of drug traffickers along the East Coast who received “hundreds and hundreds of kilograms” of narcotics on a monthly basis from the same supplier since at least 2009.
Malone was arrested on Aug. 9 and indicted by a grand jury on charges of conspiracy to possess with the intent to distribute large quantities of heroin and cocaine as well as carrying a firearm during a drug-trafficking offense.
In her ruling, Judge Ellen S. Huvelle said, “there is credible evidence that [Malone] is a large-scale supplier” after prosecutors alleged he played a leading role in a drug conspiracy that may have spanned the entire East Coast.
Prosecutors wrote, “Malone’s drug dealing activities have been extensive and long-standing, contrary to the picture of him as portrayed in letters from his friends and his family.” DEA investigation suggests Malone was part of a network of drug traffickers along the East Coast who received “hundreds and hundreds of kilograms” of narcotics on a monthly basis from the same supplier since at least 2009.
Malone was arrested on Aug. 9 and indicted by a grand jury on charges of conspiracy to possess with the intent to distribute large quantities of heroin and cocaine as well as carrying a firearm during a drug-trafficking offense.
In 1990, police found 17 grams of crack
cocaine, a .38-caliber revolver and ammunition in a search of his home. Malone
pleaded guilty in Prince George’s County Circuit Court and was convicted the
following year on charges of possession with intent to distribute and
manufacture controlled substances. He served three months in jail and was given
three years of probation.
In 1993, Malone pleaded guilty to
reckless driving and eluding police in a chase near his parents’ home in
Landover. He received six months unsupervised probation.
In 2006, prosecutors in
Prince George’s County District Court chose not to pursue a disorderly conduct
charge levied against Malone. Last year, he was acquitted on charges of
second-degree assault in a case involving a fight with the coach of another AAU
team.
Last month, the Prince
George’s County Circuit Court ruled that Malone owed $12,178.96 in tax liens.
In 2008, he was also ordered by a Prince George’s County judge to pay $9,257.39
in back taxes.
Malone has pleaded not guilty to
all the charges and faces a mandatory prison sentence of at least 15 years. (source)
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Nonprofit News…
In
Case You Missed It:
1.
The world’s wealthiest
philanthropists say the main goal of their giving is to alleviate global
poverty, and the best way to do that, they say, is through greater
collaboration between charities and other organizations, according to a study released. Of the richest
people in the survey—those with $50-million or more in investable assets—40
percent said they focus their philanthropy on global issues. Twenty-nine
percent said they direct their donations to international groups, and another
29 percent said they give to both local and international charities. The study
surveyed 317 individuals from around the world who hold investible assets of
$1-million or more. Forbes Insights produced the report.
2.
Data gathered from 140
private foundations for the 2012 Council on Foundations–Commonfund Study of
Investments for Private Foundations (CCSF) show that these organizations’
endowments returned an average of 12.0 percent (net of fees) for the 2012
fiscal year (January 1 – December 31, 2012), a significant improvement over the
FY2011 return of -0.7 percent.
3.
Girl
Scouts of the USA, plagued by continuing membership losses, has cut its
national staff by about one-fourth in recent months, chopping 85 positions
through voluntary buyouts and layoffs.
4.
A financial planner embezzled
almost $1.7 million from a camp for special-needs children, including his own,
and from three other victims, using the money to dine out, golf and travel at
their expense, Nassau District Attorney Kathleen Rice said. Drew Morgan used
his leadership positions at two nonprofits to steal almost $1.1 million
intended for Camp ANCHOR in Lido Beach and another $130,558 intended for the
camp and a group that helps people with autism.
5.
U.S.
Attorney’s Office (WA) says sloppy accounting and poor management were evident
in operation of The Genesis Project, but that an investigation showed no crime
was committed by those involved
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.
A former American Red
Cross (PA) employee who stole nearly $34,500 from the nonprofit organization
must repay the money and will serve seven years of probation.
2.
After taking thousands
of dollars as the former Virginia chef at the Executive Mansion a judge
accepted a plea agreement that also called for received a one-year suspended
sentence and pay $2,300 in restitution to the state, plus court costs.
3.
A retired Virginia
Commonwealth University professor convicted of embezzlement has received a
suspended sentence. James E. Hardigan had pleaded guilty in May to embezzling
more than $137,000 from the VCU Dental Faculty Practice Association. The
69-year-old retired dental professor was fined $2,500 and given a 10-year
suspended sentence.
4.
A once prominent Tucson
financial adviser must serve more than two years of probation and perform 1,000
hours of community service after being sentenced in a charity theft case. James
Murphy was also ordered to pay $115,000 of restitution and a $46,000 fine.
Murphy had pleaded guilty previously to stealing tens of thousands of dollars
from the Elizabeth Ann Parkman Foundation, a nonprofit that gave millions of
dollars to countless groups.
5. A Tewksbury (MA) woman who is accused of embezzling more than
$5,000 from a nonprofit that helped special needs children pleaded not guilty
to stealing $349 in popcorn sales her son raised for his Boy Scout troop. In the
first case the former treasurer for the Tewksbury-based Friends of Special
Education Kids (FOSK), is accused of using the groups ATM cards for savings and
checking to steal $5,152 to pay for her personal expenses such as her car loan,
gas, groceries and pizza. She has pleaded not guilty to a charge of an
association officer embezzling from the association. That case is still
pending. In the most recent case, the Committee Chairman for the Boy Scouts of
America -- Troop 41 in Tewksbury -- notified police on March 20 that his troop
held a popcorn fundraiser in March of 2012, where Boy Scouts went door-to-door
selling specialty popcorn.
6. A Columbus (MT) woman who pleaded guilty to
embezzling from the Stillwater Golf Club has been given a three-deferred
sentence after paying more than $43,000 in restitution.
7. She was convicted of embezzling more than $63,000
from Kingwood Christian School in Alabama.
She was sentenced to three years
of jail, but suspended the sentence and placed her on five years of probation. She also must pay $1,000 month
restitution to Kingwood Christian School for 36 months.
We
flagged these few examples of nonprofit mischief
1.
South Arsenal
Neighborhood Development Corp (CT) $200,000
2.
Southeast Arlington
Little League (TX) Over $20,000
3.
Depew Saints Hockey
Club more than $100,000
4.
Otsego County (MI)
Senior Citizens Housing Association <$20000
5.
Costa Mesa High School
(CA) $51,000
6.
Autistic Society of Washington $26,000
7.
Belle River Elementary School PTO (MI)
<$20,000
8.
Caledonia High
School (MS) unknown
9.
Shagbark Homeowners Association
(TN) over $10,000
10. Special Olympics (PA) $150,000
11. Bakersfield Police Benefit Association (CA) $45,000
12. Overland Park Regional Medical Center Medical Staff
Dues Foundation (KS) $1 million
13. Yolo County Homeless Shelter (CA) $30,000
14. East Central Ohio Education Association $185,000
15. Rialto Unified school board. $1.8 million over eight years, and more
than $3.1 million over 14 years.
16. Knoll High School (SC) $135,000
17. The One Fund (MA/NY) almost $500,000
18. Wyoming Area School District teachers union $30,000
19. Bethany College (WV) $500,000
20. Honor Flight Network of Kansas City $39,000
21. Norco High School Band Booster Club (CA) <$45,000
22. Fourth & Hope Food Bank $30,000
23. Tazewell Middle School (WV) $300,000
24. SEIU Local 6434 (CA) $150,000
25. Kids’ Club (DC) $236,000
Political/public official chicanery (just a few):
1.
A former employee with
the Alamance County Tax Department was charged with embezzlement by a public
official and accessing a government computer with the intent to defraud $3400
2.
The treasurer of the Corona Community Volunteer
Ambulance Corps (CCAC) funneled $300,000 into his personal account, using it
for vacations, limo service and fancy dinners. Conspiring were board members
that also pocketed a combined $20,000.
3.
An honored, former Naperville (IL) police
commander who became chief of the Edwardsville (IN) Police Department was
sentenced to 18 months in prison, after being convicted of embezzling nearly
$140,000 from the Illinois city’s coffers to bankroll what he said was a gambling
addiction
4.
Former Glendale
Councilman John Drayman is now scheduled to begin his criminal trial
for embezzlement, perjury and tax fraud charges for taking more than
$900,000 from the Montrose Shopping Park Assn. between 2004 and 2011.
5.
Former Weybridge (VT) town
clerk Karen Brisson caught stealing $475,980.
6.
The former head of a
Democratic Party fundraising committee in Washington state has been charged
with embezzling up to $300,000 in campaign contributions to feed a gambling
habit.
7.
Maimonides Medical
Center has been subpoenaed in a state probe of advertising payments made to a
company owned by Brooklyn Assemblyman Dov Hikind, a hospital spokeswoman
confirmed. the longtime Borough
Park powerbroker who is Maimonides' local assemblyman, had routinely failed to
disclose payments made to his advertising company, DYS Production. The company
is paid for advertisers' commercials and promotion on the assemblyman's weekly
radio program, The Dov Hikind Show. Other advertisers besides
Maimonides also pay Mr. Hikind's production company and could be subjects of
the commission's scrutiny as well.
8.
A former engineer with
Seattle Public Utilities, has pleaded guilty to embezzling more than $1 million
from the city. The Seattle Times reports he pleaded guilty to embezzling $1.1
million — the largest embezzlement of public funds in King County's history. He
allegedly diverted customers' payments for water-main-extension projects into
his private bank account and used the money to buy real estate and a car, and
to pay credit-card bills.
9.
Sheridan Township (MI) treasurer will serve up to five years probation for stealing thousands
of dollars from the township. Calhoun County Circuit Judge sentenced her to the
probation term and ordered her to pay $15,000 in restitution, her attorney
said.
10.
A former Illinois
Department of Corrections accounting employee will serve 21 months in federal
prison after admitting to embezzling more than $50,000 from a fund meant to
benefit prison workers killed in the line of duty.
11.
The former chief of the
Smithers (WV) Volunteer Fire Department is heading to prison after being
convicted of embezzlement charges.
12.
Two Stanislaus (CA)
Superior Court clerks are accused of about $6000 from court fee payments made
with cash.
13.
A super PAC formed by
the powerful city teachers' union paid more than $370,000 to an apparently
fictitious political consulting firm, which was actually the well-known New
York firm the Advance Group, records and interviews show.
14.
An arrest warrant has
been issued for the former manager of Rattlesnake Ridge Water District. He
allegedly took 29 checks totaling $29,239.93 from the water district, according
to the indictment.
15.
The former assistant
court manager of the Humboldt County (CA) Superior Court's operations
department has been indicted for embezzling almost $100,000 over 5 years.
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
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