It Took Seven Years To Uncover This $5 Million Charity Fraud

by Gary Snyder

Since 2005, while working as a $56,000-a-year administrative assistant, Ephonia

Green allegedly stole $5.1 million from the Association of American Medical Colleges. nearly $1.4 million was paid via 74 checks made out to Green’s bridal business, known as Couture Miss Bridal & Formal, court files show. 

At the association, Green had enough access to key financial systems that she was able to create fake invoices in the names of legitimate groups that she then approved for payment, the court files contend. And when the checks were ready, she had them returned to her, not sent to the vendors, prosecutors charge.

Under that system, a spelling change of just four letters allegedly netted $3.7 million for Green when she purportedly created nearly 200 false invoices in the name of the well-known Brookings Institution policy center but deposited the checks into accounts she opened for her own “Brookings Institute.”

The alleged embezzlement ballooned starting in 2005, the criminal court files charge, until Green netted an amount that would be close to 90 times her salary. (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, 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)

The Evidence Is In...But Nothing Is Happening

by Gary Snyder

“The Harvard University's Houser Center for Nonprofit Organizations suggests that fraud losses among U.S. nonprofits are approximately $40 billion a year. "According to a Washington Post analysis of the filings from 2008-2012 ... of more than 1,000 nonprofit organizations, ... "there was a 'significant diversion' of nonprofit assets. Just the top 20 organizations in the Post's analysis had a combined potential total loss of more than a half-billion dollars.” (source)  Need we say more…?

More (source) in 2012:

• ·       Nonprofit leaders need to issue a “clarion call,” says Cindy Lott, a lawyer who developed and runs Columbia Law School’s Charities Regulation and Oversight Project and previously served in the Indiana attorney general’s office. “We need good regulation. We need it at the federal level. We need it at the state level. the nonprofit world has become such a big economic engine—employing millions of people and handling billions of dollars—that it needs a strong regulatory regime to “protect the charities that are doing it right,” she says.”
• ·       “Why can’t we have the equivalent of an SEC for nonprofits?” says Janet Greenlee, an associate professor of accounting at the University of Dayton who specializes in nonprofits.
• ·       Since Congress concluded its hearings, problems with veterans charities that are spending little on programs, or even allegedly committing outright fraud, have continued unabated. So have reports of other alleged improprieties, but nothing happened.
• ·       Some critics say the nonprofit world needs to do much more to call out bad actors, including expelling them from trade groups. “The charitable community seems loathe to speak ill of anybody anytime, anywhere,” says Dean Zerbe, a former top aide to Republicans on the Senate Finance Committee.
• ·       A committee of the House of Representatives held hearings to explore accusations that some veterans charities were spending just a trickle of the money they raised for programs to help veterans or their families…nothing happened
• ·       Nonprofit and policy experts have, over the years, proposed many ideas to improve the way that charities are regulated, a task that now generally falls to the Internal Revenue Service, which monitors tax-exempt organizations, and the states, many of which require charities and professional fundraisers to register and provide financial information.
• 
  
• And now this: One year later, nothing has happened: 

Better Oversight by Nonprofit Leaders Can Help Prevent Fraud

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)

Influencers and Charity Leaders Do An About Face

by Gary Snyder

We have seen a remarkable change in the charity sector.

The Washington Post expose,  "Inside the hidden world of thefts, scams and phantom purchases at the nation’s nonprofits", immediately brought out some allegations as to the article's veracity.

The sector leaders were furious and charged that the story was selective in its approach; that it was a "few bad apples"; that it overreached; that it had a slanted presentation; that it was ill-informed and negative; that it was false and misleading; that the press needed to better understand how the sector works; that the article was salacious; and that fraud in nonprofits was not a problem.

A scathing depiction of America's 50 worst charities in the Tampa Bay Times preceded it by a couple of weeks.

Out of humiliation, a stunning reversal by charity leaders took place. They rapidly changed their views for two reasons.

First, Congress became irate and promised to hold Congressional hearings on charity fraud. Senator Charles E. Grassley, ranking member of the Judiciary Committee, said that "Tax-exempt dollars are meant for tax-exempt purposes, not bankrolling a personal Champagne lifestyle." This was representative of other Congressional leaders sentiments. Finger pointing by charity leaders that the fraud problem was, in part, the responsibility of Congress might also have precipitated the Congressional heated response.

Secondly, the unveiling of immense fraud with no persuasive solutions by charity leadership was profoundly embarrassing. The crush of the public’s high expectations caused a palpable backlash. It pricked the sensibilities of all donors---big and small. The outrage called for needed change in nonprofit behavior.

A major focus of the outcry was that the dysfunctional charity leadership consigned the sector to a precipice. The leadership's denial, for more than decade, has now put the trust of the American people in serious jeopardy.

Unlike the leaders initial response, virtually all sided with the investigative reports.  

The Post article resulted in an outpouring of press outlets from all regions of the country. This was not a rare incident. It showed 1,000 now-highly visible instances of charity fraud. This was a small sampling of the 1.6 million charities and a much larger $41-51 billion national fraud problem endemic to the charitable sector.  

One leader best illustrated the turnabout.  He initially charged that there was no nonprofit fraud as highlighted in The Post story. Just a few days later, he saw the winds turn against him and with significant pushback He walked back his previous position and started his column by saying "The Washington Post's investigative series on asset diversions in nonprofit organization has been a tremendous success."  

Another dismissed the notion that nonprofits were the perpetrators. A few days later that same leader penned an article suggesting that that nonprofit leaders should renew their resolve…and take this seriously. Nonprofit board members, leaders, funders, volunteers, donors and regulators are in this together, so take proactive steps to prevent and insure that nonprofits are living up to the high standards the public expects and deserves.

Despite their professed turnabout, the leaders have no remedy for addressing the problem. Now, with some acknowledge of the explosion in nonprofit fraud, hopefully the sector will embrace much-needed change. If not, the solution will be in the hands of less friendly regulators.

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: Washington Post, 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)

The Evidence Is In

“The Harvard University's Houser Center for Nonprofit Organizations suggests that fraud losses among U.S. nonprofits are approximately $40 billion a year. "According to a Washington Post analysis of the filings from 2008-2012 ... of more than 1,000 nonprofit organizations, ... "there was a 'significant diversion' of nonprofit assets. Just the top 20 organizations in the Post's analysis had a combined potential total loss of more than a half-billion dollars.” (source)  

Need we say more…?

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)