Monday, December 2, 2013

Late November Edition-Nonprofit Imperative E-Newsletter


Nonprofit Imperative
Your nonprofit browser
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:
Association of Medical Colleges; U.S. Navy Veterans Association
Charity Check Up:
Metro. N.Y. Council on Jewish Poverty
A Thought or Two:
Overwhelming Evidence of Charity Fraud
Nonprofit News-In Case You Missed It:
Audits; Americans for Prosperity; Sacramento Public Library…more
Political/Official Chicanery:
MN; NYC; NJ; PA; VA; HI; CA; WA; MT; OK; MI; CO…more
What Do You Think?

Why are there so many charity CEOs who are rip off artists?...“The nonprofit sector takes in $1.5 trillion a year. It’s the largest nonprofit sector in the world… And the amount of oversight is pathetic.” (Ken Berger, Charity Navigator)

“…the sector as a whole can’t afford the reputational damage from even the hint of fraud.” (Tim Delaney, chief executive of the National council of Nonprofits)
“…there are still shortcomings with the failure of groups (of charities) to be completely honest or pursue wrongdoers” (Washington Post Editorial)

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.”
It Took Seven Years To Uncover This $5 Million Charity Fraud
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.
A $100 million Charity Thief Finally Convicted
The leader of the bogus U.S. Navy Veterans Association charity was convicted in Cleveland of stealing from donors.
After a six-week trial, John Donald Cody, 67, better known as Bobby Thompson, was found guilty of 23 charges including theft, money laundering, corrupt activity, record tampering and identity fraud.
The verdict caps an episode in the life of Cody, a Harvard graduate and former Army intelligence officer who used a stolen identity to fabricate a military resume to create a charity ostensibly to aid Navy veterans
The charity collected an estimated $100 million before it was exposed as a sham in 2010, when a Florida newspaper reported none the association's officers existed and office locations were no more than UPS mailboxes. Little of the donated money helped veterans.
After the disclosures Thompson disappeared for two years until U.S. marshals, in Portland, Ore., arrested him, in 2012. Among his possessions was a suitcase containing $1 million, the newspaper said.
He faces a minimum of 10 years in prison.
A Charity Check Up:
An Accomplice Arrested In $7 million Charity Fraud
The owner of a Long Island insurance company has been charged with helping longtime Jewish community leader loot more than $7 million from one of the city’s most influential social service organizations and pocketing at least $1 million himself, according to a criminal complaint filed in the case. The insurance company owner, Joseph Ross, was arrested and charged with first-degree grand larceny and money laundering and other crimes for what the complaint said was his admitted role in the scheme, which spanned two decades and targeted the social service organization, the Metropolitan New York Council on Jewish Poverty. It appears that investigators have concluded that the amount of money stolen between the early 1990s and August 2013 was greater than they had believed.
In the initial complaint the total amount of the theft was listed as in excess of $5 million. But the complaint against Mr. Ross says the total amount of money stolen was in excess of $7 million.
A Thought or Two:
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…?
More (source):
  • ·       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 Needed
Does somebody keep forwarding you this newsletter? Get your own copy. It's free! Sign up here. Send tips/stories to Nonprofit Imperative. Follow us on our blog or on Twitter---Nonprofits News
 Nonprofit News…
In Case You Missed It:
1.     While independent audits serve an important purpose and may prevent potential fraud, audits rarely detect fraud. Even when an organization conducts an independent audit or review of its financial statements, the auditors do not guarantee that the organization is free from fraud.
2.     Americans for Prosperity — the main political arm of billionaire industrialist brothers Charles and David Koch — spent a staggering $122 million last year as it unsuccessfully attempted to defeat President Barack Obama and congressional Democrats, according to a Center for Public Integrity review of documents filed in Colorado. During its previous eight years of existence, Americans for Prosperity spent a combined $72 million, a review of Internal Revenue Service records indicates. Tax records show Americans for Prosperity has received large sums of money from other Koch-connected nonprofits such as Freedom Partners and the Center to Protect Patient Rights. Corporate interests, such as the American Petroleum Institute and tobacco giant Reynolds American, are also among Americans for Fallen Blue is a Maryland-based organization that raises money for a police nonprofit benefiting the families of fallen officers; helping to cover their funerals, establishing scholarships for their kids and even one day creating a memorial for those killed outside the line of duty. Center for Public Integrity confirmed Fallen Blue is not registered as a nonprofit with the Internal Revenue Service or with Maryland's Secretary of State, which oversees nonprofits. John Guarnieri who runs the organization tells ABC2 the expenses accrued by his organization are often more than they bring in and that while they thought about becoming a "full-fledged nonprofit,” because of high costs they’ve instead opted to donate what they can to another group, Safe Call Now. Safe Call Now refused to tell ABC2 if Fallen Blue has contributed to its organization and in what amount. Their Executive Director did not respond to a request for additional information through email. Update: The U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued initial guidance regarding qualification requirements for tax-exemption as a social welfare organization under section 501(c)(4) of the Internal Revenue Code.  This proposed guidance defines the term "candidate-related political activity," and would amend current regulations by indicating that the promotion of social welfare does not include this type of activity. 
3.     The Sacramento Public Library will be getting a check for nearly a half million dollars – not in donations, but in restitution. It all stems from two years ago, when two former employees embezzled close to $800,000 from the library.
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. (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.     Even though David Mau pleaded guilty to forgery, counterfeit and theft at the ARC of Bismarck (ND), he was sentenced to no jail time and perform 100 hours of community service.
We flagged these few examples of nonprofit mischief 
1.     Alaska Subsistence Defend Fund /Alaska Traditional Foods Security Council $21,500
2.     Brown County (MN) Agricultural Society $91,000
3.     River Bend Nature Center (MN) $23,900
4.     Rochester (MN) Juvenile Hockey Association $32,000
5.     The Fairmont Youth Hockey Association (MN) $9,479+.
6.     Center for Independent Living of Southwest Florida $900,000
7.     Faith Without Walls International Ministries (NY) $100,000
8.     Local 64 of the International Brotherhood of Electrical Workers and its joint apprentice training fund (NJ)  $350,000
9.     Ardsley North Hills Athletic Association and the Abington Bulldogs Youth Wrestling Club. (PA) $40,000
10.  Virginia Angus Association $70,000
11.  Lock Haven Area Jaycees (PA) unknown
12.  Waianae Community Outreach (HI) $800,000
13.  Bush Elementary parent-teacher organization (CA) $12,000
14.  Luzon Visayas Mindanao Association (CA) $68,000
15.  Seattle Public Schools (WA) $3 million
16.  Montana’s Veterans of Foreign Wars $140,000
17.  Amateur Athletic Union wrestling club (MT) $10,000
18.  Tulsa (OK) Public School Athletic Director $92,000 
19.  Waverly Junior Football (MI) $19,000
20.  Axton Elementary (VA) $14,000
21.  Breckenridge Festival of Film (CO) $210,000
22.  Boys & Girls Club (CA) unknown
23.  Mechanicsville Advent Christian Church (VA) $87,000
24.  Portage Rotary Club (MI) <$50,000 
Political/public official chicanery (just a few):
1.     A highly regarded school principal in Fairfax County and her former finance aide have been arrested and charged with embezzling more than $100,000 and money laundering. Update: The principal of a Northern Virginia middle school and her former finance technician have been relieved of their duties after embezzlement allegations surfaced.
2.     The Aransas Pass (TX) Police Department has arrested a volunteer firefighter suspected of felony theft of $22,000 from a nonprofit organization and fraud.
3.     The wheelchair-bound former Mid-Peninsula (CA) Water District worker accused of stealing more than $200,000 to fund a gambling addiction pleaded not guilty yesterday to embezzlement in her first court appearance on the alleged crimes prosecutors say went unnoticed for three years until she left on medical leave.
4.     She is not just any city worker either, but the former Chief Financial Officer for the Oklahoma City Zoo. She is accused of embezzling more than $10,000
5.     The former executive director of a D.C. public charter school, Nia Community Public Charter School,  admitted in federal court that she embezzled $29,000 in school funds, according to U.S. Attorney Ronald C. Machen Jr.’s office. He entered a guilty plea to a charge of theft from a program receiving federal funds is scheduled to be sentenced in February in the U.S. District Court for the District of Columbia.
6.     A former fire captain in Park City was charged with embezzling more than $30,000. Randy Scott, who is a former captain in the Park City Fire District, is facing three second-degree felonies for theft.
7.     A federal grand jury indicted a former supervisor in the Seattle office of the Bureau of Alcohol, Tobacco, Firearms and Explosives on charges of embezzling $20,000 from a fund for confidential informants.
8.     Jackson County’s (MO) former court administrator pleaded guilty to embezzling $140,000 in court funds for her own use while serving as the court’s top non-judicial official.
9.     Brimfield's (MA) former treasurer has been charged with embezzling more than $80,000 from the town.
10.  A former Kentwood (MI) Parks and Recreation clerk will spend 20 months to 20 years in prison after she managed to steal more than $331,000 from the city, a theft that led to job cuts, according to the mayor-elect.
11.  The former CEO of Compensation Advisory Organization of Michigan was charged earlier this year after the Michigan Attorney General’s office received an audit that showed the non-profit company’s finances were not in line. After investigating, prosecutors say he and his former bookkeeper embezzled more than $2.6 million from the non-profit. The Compensation Advisory Organization of Michigan provides administrative and customer service support for the Michigan Workers' Compensation Placement Facility. He will serve at least the next three years in prison after pleading guilty.
12.  A former administrator with Huntington (WV) Housing Authority (HHA) has pleaded guilty to embezzlement from the Shelter Plus Care Program.  She embezzled a total of $23,000 from HHA.
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. On rare occasions, there may be duplicates.
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; 248/324-3700;
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)
Post a Comment