Nonprofit
Imperative
…Your nonprofit browser
November
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:
Washington Post Revelations
Charity Check Up:
CA Department of
Child Support Services
A Thought or Two:
Criminal Checks
Are Necessary
Nonprofit News-In Case You Missed It:
American Red Cross Update;
Boy Scouts…more
Political/Official Chicanery:
VA; MI; CA; GA; IA; NY; LA…more
What Do You
Think?
Financial Industry Regulatory Authority fraud
research reveals some surprising facts. The more educated and wealthier you
are, the more likely you are to invest in a potentially fraudulent scheme. And
men, because they are generally less risk averse, are more vulnerable than
women. Other findings are sad but not so surprising: Americans over 65 years of
age are 34 percent more likely to lose money to fraud than their under-50
counterparts. (Financial Industry
Regulatory Authority (FINRA)
"Fraudsters who are 'good' at
their game will put you into a heightened emotional state…" they talk
excitedly and create a feeling of pressure. "They aim to move you from the
rational side of your brain to the emotional side."
“There’s a gross
disinterest among nonprofits and associations in good, effective controls.” (AssociationsNow.com)
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.”
Post’s Remarkable Story on
The Pervasiveness of Charity Fraud
The
Washington Post expose, "Inside
the hidden world of thefts, scams and phantom purchases at the nation’s
nonprofits," deserves everyone's attention.
The Post analysis
of filings from 2008 to 2012 found that the American Legacy Foundation is one
of more than 1,000 nonprofit organizations that checked the box indicating that
they had discovered a “significant diversion” of assets, disclosing losses
attributed to theft, investment fraud, embezzlement and other unauthorized uses
of funds.
The
diversions drained hundreds of millions of dollars from institutions that are
underwritten by public donations and government funds. Just 10 of the largest
disclosures identified by The Post
cited combined losses to nonprofit groups and their affiliates that potentially
totaled more than a half-billion dollars.
While
some of the diversions have come to public attention, many others have not been
reported in the news media. And The Post found that nonprofits routinely
omitted important details from their public filings, leaving the public to
guess what had happened — even though federal disclosure instructions direct
nonprofit groups to explain the circumstances. About half the organizations did
not disclose the total amount lost.
Each
year, larger registered nonprofits file a form with the federal government that
lays out their mission, leadership, revenue and expenses. The question about
diversions was added to the forms with little fanfare in 2008, one of several
changes meant to make it easier for the public to gauge how well nonprofit
organizations manage money.
While the losses identified in The Post’s study total
hundreds of millions of dollars, they represent only a fraction of the total of
fraud in the charitable sector. The new question was phased in over three years and appears
only on forms submitted by larger nonprofit groups. Private foundations and
many smaller groups fill out alternative forms or no forms at all.
Some
organization officials said in documents and interviews that they chose not to
alert police, instead settling for restitution, which often meant they also
avoided public attention.
Accountant Charged In Multi-Million Dollar Fraud
A former Rialto (CA) school district accountant who was allegedly captured on video stuffing lunch money into her bra has been charged
with embezzling $1.8 million over the past eight years. Judith Oakes handled deposits of student lunch money into a district bank
account. Her arrest followed an investigation into missing funds. A school
district audit found $3.1 million couldn't be found.
The case led to the district superintendent and his assistant being
placed on leave.
A Charity Check Up:
A Lesson In Protecting Public Taxpayer Support
Background checks are essential (this 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”
An 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:
Please Do Criminal Checks On Anyone That Accesses the Money
The former chief financial
officer of the Central New York Community Foundation was arrested on
embezzlement charges for stealing $665,000 from the United Methodist Church of
Manlius. No one was aware that she had a criminal record. She was convicted in
1992 of falsifying business records in connection with the theft of $120,000
from the Camillus Housing Authority while he was its treasurer.
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News
Nonprofit
News…
In
Case You Missed It:
1 1.
Under
pressure from the New York state attorney general, the American Red Cross
agreed to commit another $6 million to relief efforts for super-storm Sandy
victims, on top of the $308 million already allocated by the charity for Sandy
relief, officials said. The agreement is between Attorney General Eric
Schneiderman and the Red Cross. Additionally, the charity has agreed to
increase the transparency of its fundraising following disasters, including
modifications to its website. In addition to the Red Cross, Mr. Schneiderman
has come to agreements on payouts with three other charities. The
Cleveland-based Brees Dream Foundation, founded by the New Orleans Saints
quarterback Drew Brees, will pay out some $225,000 in Sandy donations by next
October. The New York-based Kids in Distressed Situations, Inc., will spend
nearly $300,000 in donations by early next year. The New York Annual Conference
of the United Methodist Church will spend down $3.15 million over three years.
2 2. After more than 50 years of support,
United Way of the Bluegrass has suspended nearly $100,000 in annual funding to
the Boy Scouts of America's Blue Grass Council because of national scouting
policy to not allow gays to serve as adult leaders. The Boy Scouts National
Council voted in May to allow openly gay youth to join but maintained its ban
on gay leaders.
3 3. A state investigation into a network of nonprofit
groups that funneled $11 million into initiative campaigns in California last
year has revealed the identities of dozens of previously hidden donors to the
various organizations. The Fair Political
Practices Commission got two organizations with ties to the politically
conservative Koch brothers to pay a $1 million fine due to campaign violations
incurred in their spending of $15 million to defeat ballot initiatives
concerning a tax increase and union influence in the state last year.
4 4. The Michigan
Gaming Control Board has suspended charitable gambling at 15
permanent poker rooms since 2010. This is the latest location where charity
poker games have been terminated for illegal gambling and violating other state
laws. The large amount of cash running through bars/poker rooms has many times
led to fraud and illegal activities when there is little or no oversight,"
MGCB executive director said.
5 5. The Farmington (NM) Convention and Visitors Bureau
has recovered $1,300 after mailing letters to people who may have unknowingly
benefited from a half-million dollar embezzlement scandal.
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.
2.
Former
New Jersey Assemblyman has been sentenced to three years’ probation for
stealing funds from his family’s charitable foundation and for filing false
financial disclosure forms. He was ordered to make full restitution of $32,500
to the Bernardino Coutinho Foundation, a nonprofit organization devoted to
community development and cultural education in the Portuguese community and
perform 50 hours of community service
3. A paid board member who together with her husband operated and
controlled the nonprofit United Hebrew Cemetery pleaded guilty to stealing hundreds of
thousands of dollars. He paid $1.1 million in restitution as part of a civil
settlement agreement, and was sentenced to five years’ probation.
We
flagged these few examples of nonprofit mischief
1.
Granite Falls High
School (WA) $10,000
2.
Bray-Doyle School
District (TX) $200,000
3.
Bon-Ton Stores
Foundation $1.4 million
4.
National Relief
Charities (OR) $4 million
5.
Touched by Angels Inc
(MA) $150,000
6.
Malta Projects of
Southeastern Florida $27,000
7.
East Fairmont Rockets
(WVA) $10,100
8.
Evangelical Lutheran
Church in America synod to Rural Life Outreach (MN) $600,000
9.
American Cancer Society
(NC) more than $68,000
10. Sarasota Firefighters Benevolent Fund (FL) hundreds
of thousands of dollars
11. Minnesota’s Evangelical Lutheran Church $600,000
12. Federation of Gujarati Associations in North
America (NJ) $85,000
13. Downing Elementary School (WA) $6000
14. Vancouver's New Day Community Dental Clinic $41,000
15. Ashleigh Place Group Home (SC) $18,000
16. Luzon Visayas Mindanao Association (CA) $68,000
17. Glencoe Youth Baseball League (AL) $14,600
18. Lyndon State College (VT) $10,000
19. Henniker (NH) Community School PTA $1000+
20. Sam and Lindsey Porter Foundation (MO) $350,000
Political/public official chicanery (just a few):
1. An 82-year-old man who served as treasurer of the Onley (VA) Volunteer
Fire and Rescue Co. has been arrested on multiple counts of embezzlement
following a State Police investigation.
2. Kwame Kilpatrick, the former Detroit mayor
convicted earlier this year in a high-profile corruption case that began with
allegations that he misused a nonprofit he established to aid city youths, was
sentenced to 28 years in prison
3.
The California Fair
Political Practices Commission announced a combined fine of $1 million -- the
largest-ever for violating the state's campaign finance laws – against Americans
for Responsible Leadership and the Center to Protect Patient Rights, a separate
Arizona-based group. The FPPC has found the nonprofits were used to
illegally diverted $11 million into a campaign account that worked to defeat
Proposition 30, a tax measure on last year's ballot pushed by Gov. Jerry
Brown.
4.
A campaign treasurer
for state Rep. Douglas McGrory (CT) has been charged with embezzling more than
$4,000 in campaign funds
5.
A
Clarkston (GA) city councilwoman was indicted accusing her of embezzling
$50,000 from the Clarkston Community Center. A civil processing clerk at for the Polk County (IO) Sheriff’s
Office is charged with embezzling money or value of the property that exceeds
$10,000.
6. A former top aide to indicted state Sen. John
Sampson has been charged on a range of fraud and tax crimes – including charges
he bilked the New York Democratic Senatorial Campaign Committee out of $100,000,
federal authorities announced. The insider also failed to report over $2 million
in consulting income on his taxes, got his bank to make a false statement to
his mortgage lender, and defrauded a Yonkers resident of $66,000, according to
the criminal complaint filed against him.
7. Former Portage City Council Member Elizabeth
Campbell is charged with embezzlement of more than $20,000 from the Portage
Rotary Club while she was their president.
8.
A former New Orleans
Traffic Court chief financial officer has been charged
with embezzlement, money laundering and evading the IRS after investigators say
he stole almost $700,000 over his three-year stint as a city employee and spending
the stolen cash on gambling and fancy cars, according an indictment
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, Washington Post, The Patriot-News, Vermont Public Radio, Miami Herald, National Public
Radio, Huffington Post, The Sun News, Atlanta Journal
Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC
Spotlight on the News, WWJ Radio, msnbc.com, Marie Claire, Ethics World, Tactical Philanthropy, Aspen Philanthropy
Newsletter, Harvard Business Review, Current Affairs, 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, The Michigan Nonprofit
Management Manual, 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,
VPR News, National Enquirer,
- 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
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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