Wednesday, November 13, 2013

Early November Edition-Nonprofit Imperative E-Newsletter


Nonprofit Imperative
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November 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:
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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 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 
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, 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.
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





















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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