Thursday, January 2, 2014

Late December Edition-Nonprofit Imperative E-Newsletter


Nonprofit Imperative
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December 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:
Angledocs
Charity Check Up:
Celebrity Charities
A Thought or Two:
Background Checks; Trust Accounts
Nonprofit News-In Case You Missed It:
Audits; NFL, Child Foundation…more
Political/Official Chicanery:
MN; NYC; NJ; PA; VA; HI; CA; WA; MT; OK; MI; CO…more
What Do You Think?


IRS Looking At Charities’ Behavior?
by Gary Snyder
Newly confirmed IRS chief John Koskinen said that he would launch an inquiry into nonprofit organizations that have lost millions of dollars to financial wrongdoing and failed to disclose the circumstances to donors and law enforcement, according to the Washington Post.
Members of Congress have said they are troubled that accounts of multimillion-dollar losses have come to light through news media reports and not from IRS enforcement actions.
The Washington Post reported this year that it had identified more than 1,000 nonprofit organizations that in recent years disclosed on annual tax returns that they had suffered significant diversions — many of them acts of fraud and embezzlement carried out by insiders at the organizations.
The diversions highlighted in the articles totaled hundreds of millions of dollars. But the newspaper’s investigation also found that, in violation of IRS reporting rules, many of the organizations failed to include in their disclosures the amounts they lost and other key details.
After a hearing this week, Senator Charles Grassley submitted a written question to Koskinen, saying he was troubled about the IRS’s “lack of oversight” of charities and nonprofit organizations.                                                                                   ____________________
           
“The growth of charities has generated a marketplace that can benefit the unscrupulous. As far back as 1969, Senator Al Gore Sr. (father of the man who served as vice president of the United States) warned that we [the public, through tax preferences] are subsidizing bogus and phony charities”. (Chronicle of Philanthropy, Ken Stern)

"...with fewer than 100 full-time state charity regulators, far too few to exercise any real oversight... and the IRS is chronically understaffed, the I.R.S. did undertake one of its rare field audits. And yet, despite the fact that the main office (of the U.S. Navy Veterans Association) was a trailer, its state offices were empty lots or postal drops, and its board of directors and C.E.O. a total fiction, the I.R.S. in 2008 gave the association a “clean bill of health.” 
It wasn’t until the two reporters came sniffing — first curious about the political contributions and subsequently intrigued by a man calling himself Bobby Thompson obvious dissembling — that the real $100 million fraud story began to emerge. (NYT).  Federal marshals tracked him down in Portland, Ore., finding him with a card to a storage unit containing $981,650 in cash and almost two dozen fake identity cards.                                                 ______________________
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.”
NY AG: Physician Channeled Nonprofit Funds To Herself
The head of a Queens nonprofit surrendered to authorities on charges she bilked taxpayers out of nearly $400,000. Dorothy Ogundu, a licensed physician and founder of Angeldocs Inc., allegedly used the Hollis-based outfit to pilfer $373,000 worth of city, state and federal funds, said state Attorney General Eric Schneiderman.
Dr. Ogundu used the money for various personal expenses, including buying cars and shipping them back to Nigeria, authorities said. According to the criminal indictment, she used her nonprofit to funnel federal, state and city funds to her own private enterprises. Ogundu was charged with multiple counts of grand larceny, forgery and falsifying business records. She faces up to 15 years in prison if convicted, the AG said.
The gynecologist turned herself in to police but denied the charges. Between April 2006 and September 2013, Ogundu received 12 government grants for her Angeldocs organization, which was supposed to be a health clinic for low-income families. Schneiderman said Ogundu stole a portion of each grant by filing fake requests for reimbursements, creating faux expenses, charging rent for her organization when in reality she owned the building and falsifying paperwork to make it seem like a board of directors oversaw her expenses, among other things.
A Charity Check Up:
Another Celebrity Under Investigation By The IRS And A Grand Jury  
Nonprofit Imperative has warned donors to be cautious in giving money to celebrity charities.
A Hall of Fame member of the Broadcast Pioneers of Philadelphia and former TV sports director Don Tollefson’s charity solicitations 's have been raising eyebrows for more than a decade,
Now there is a multijurisdictional criminal probe into the alleged scams in which he was involved. "It's a monster right now," said Bucks County Deputy District Attorney Ryan Hyde, who specializes in complex white-collar cases, of the Tollefson investigation. "We've talked with more than 100 victims. It's a sizable amount of money."
The questions go way back.
Tollefson failed to deliver money to a cancer patient at least 10 years ago after Winning Ways raised money in conjunction with a player from the defunct women's soccer team, the Philadelphia Charge, according to a source. None of at least four charities associated with Tollefson - Winning Ways, One Child Saved, Employ Young Adults and tixr4kids.com - appears to be registered with the IRS. The website for One Child Saved has been taken down, but a cached version of the site says One Child Saved and Winning Ways are 501(c)(3) nonprofits and that all donations are tax-deductible. Investigators are trying to determine how some of that money was spent. Tollefson's off-the-grid charities do not appear to have filed the paperwork typically required of nonprofits. “In order for it to be tax deductible at all, they would have to have an IRS determination," said Greg McRay, chief executive of the Foundation Group, which assists nonprofits.
Still Another…
Jane Fonda’s charitable foundation has not donated money since 2006…with $800,000 in the bank. IRS requires private foundations to make annual distributions totaling at least five percent of its assets. If not, it faces stiff IRS penalties.
This all in the face of Kim Kardashian giving only 10% of auction sales to disaster relief in the Philippines and her sister’s husband, Lamar Odom’s charity giving nothing notwithstanding raising $2.2 million.
A Thought or Two:
Absent background checks account for millions of dollars from nursing home residents
Many states do not require criminal background checks on nursing home staff who manage residents' trust funds, and few demand audits of those accounts – a regulatory gap that contributes to scores of cases in which the money is stolen or mismanaged. Just four states require audits of all accounts while some do a sampling. Conversely, nearly all states require background checks of those in caregiving roles. Thousands of nursing home residents have had their savings stolen while held in trust accounts, according to a USA TODAY investigation. Thefts can reach hundreds of thousands of dollars. More than 1500 cases have been cited for mishandling.
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Nonprofit News…
In Case You Missed It:
1.     Independent audits serve an important purpose and may prevent fraud. Two Western Pennsylvania nonprofits are tangled up in court, where tax delinquencies and alleged mismanagement of millions of dollars have volunteer board members under Attorney General Kathleen Kane's scrutiny. Kane aims to oust trustees at Conneaut Lake Park in Crawford County, which failed to pay taxes and keep fire insurance on its Diamond Ballroom, destroyed in a fire in 2007.In Pittsburgh, the August Wilson Center for African American Culture fell behind on mortgage payments for a $40 million building constructed without a clear revenue plan, ending up in foreclosure. Joe Peters, spokesman for Kane, said the office has a responsibility to hold board members to their fiduciary duties under the Commonwealth Attorneys Act.
2.     The NFL is the most powerful brand in sports, a $9 billion-a-year behemoth will continue to enjoy a tax break that other multibillion-dollar corporations would die for: The league is organized as a 501(c)(6) tax-exempt organization, allowing it to avoid paying taxes on certain activities. The IRS has blessed the setup for years, a complicated structure in which much of the league’s profits are taxed, while more mundane tasks are exempt. Even critics say not to blame the league — it is perfectly legal. For years, Sen. Tom Coburn (R-Okla.) has been on a solitary quest to revoke the tax benefit. Last month, he reintroduced legislation to ax it, though even Coburn admits he’s fighting an uphill battle.
3.     The National Fraud Authority’s Annual Fraud Indicator, published in June, does not really seem credible" noted Carl Watson of the accountancy firm Chantrey Vellacott DFK. 9.2 per cent reported being victims of fraud in 2011/12. It is an underestimate. "It is such a ubiquitous crime, and there are so many different schemes and methods. The data is unsatisfactory." Some frauds were nearly impossible to detect, he said.
4.     A McAllen, Texas, couple gave more than $1.8 million to the Oregon branch of an Iranian children's charity that sent the money to Iran. The donations were used to make investments in Iran that the couple controlled, according to an indictment. The indictment described a scheme in which the Texas couple got tax exemptions for their donations to the Portland-based Child Foundation charity, including backdating some of their donations to reduce their tax burden for years in which they didn't contribute money. A federal judge in Portland has sentenced a Texas urologist and his attorney wife to a year and a day in prison after they were convicted of defrauding the government in a scheme prosecutors said also violated the U.S. trade embargo with Iran. In addition, U.S. District Court Judge Garr King ordered the couple to pay $1.1 million, including $200,000 in restitution. They also were told to surrender $600,000 that authorities said was involved in money laundering.
5.     The World Giving Index 2013 found that the United States did not even make the top 10 for giving to charity. Americans are less likely than people in other countries to donate money to help others, according to a new global survey of 135 countries. In terms of giving money to charity, the U.S. population was ranked 13th, with 62 percent of Americans reporting having made a financial donation in the previous month. The No. 1 and No. 2 rankings on that measure were Myanmar (85 percent) and the United Kingdom (76 percent).
6.     Former supporters of the Kabbalah Centre have sued the Los Angeles-based spiritual organization for fraud, alleging the misuse of more than $1 million they contributed to a building fund and charitable causes.
7.     Developing countries lost nearly $1 trillion to fraud, corruption and shady business transactions in 2011, vastly outpacing the foreign aid they received and the pace of dirty money leaving emerging nations is accelerating, according to Global Financial Integrity, the Washington-based group that exposes financial corruption. Illicit finance leaving the 150 developing countries totaled $946.7 billion in 2011, up 13.7 percent from the prior year and the largest amount in a decade. This means that for every $1 in economic development assistance going into a developing country, $10 are lost.
8.     Police Protective Fund hired felons at its five Florida call centers to solicit donations from the public. State regulators raided the charity’s phone rooms in September after the Tampa Bay Times and The Center for Investigative Reporting named Police Protective Fund one of the nation’s worst charities based on how much it spent over a decade on telemarketing. They found convicted felons among those working the phones and arrested four of the charity’s managers on charges they made the hires. It turns out the law was written to apply only to “professional fundraising consultants,” not phone room managers or charity executives.
9.     Harvard-trained attorney John Cody who went by the alias Bobby Thompson and bilked about $100 Millions from Navy charity donors gets 28 Years in prison and slapped with a $6 million fine
We flagged these few examples of nonprofit mischief 
1.     Princeton Triangle Club (NJ) $100,000+
2.     White Knoll High School (SC) $100,000
3.     Parent Faculty Club at Dougherty Elementary School $38,000
4.     Wheaton Franciscan Services (WI) $1, million
5.     Regional Consolidated Services (NC) $400,000
6.     Amelia Island Youth Soccer League (FL) $60,000
7.     Stanwood-Camano Little League (WA) thousands of dollars
8.     Rockwall Housing Development Corp. (TX) $236,000
9.     Man Up Inc (FL) $76,000
10.  Disabled American Veterans, Inc. (MA) $125,000
11.  YWCA Lincoln (NB) $34,000
12.  Portola Valley (CA) Schools Foundation$182,500
13.  Lutheran Church of the Resurrection in St. Louis County $300,000
14.  Ashburnham Westminster Youth Hockey Association (MA) $29,000
15.  Emmanuel Evangelical Congregational Church (PA) $81,000
16.  Milford Special Olympics and the Milford Club (CT) $240,000
17.  Owego-Apalachin Employees Association (NY) more than $50,000, 
18.  PTO at Sheridan Road Elementary (MI) $20,000
19.  Swamp Boys and the Fishing to Fight Cancer Foundation (NC) $10,000
20.  World Mission Thrift (MI) $67,000
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 the Northern Virginia middle school and her former finance technician have been relieved of their duties after embezzlement allegations surfaced.
2.     A woman, who served as the treasure of the Connecticut Tax Collectors Association has been arrested, accused of embezzling more than $50,000 from the organization.
3.     A bond clerk will be sentenced for embezzling from the 25th District Court in Lincoln Park, MI She was accused of embezzling $7,380 from the Lincoln Park district court, beginning in August 2012.
4.     Brookline (MA) Police have charged an employee in the town’s engineering division with larceny by embezzlement for allegedly misappropriating public funds.
5.     A former superintendent of the Dayton Independent School District has entered a guilty plea to embezzling more than $193,000 over eight years from the impoverished northern Kentucky school district.
6.     Missouri state Rep. Steve Webb faces charges of alleged theft in campaign funds has resigned from the Legislature. Webb solicited a donation from Community Loans of America to sponsor a black caucus reception in Washington. He transferred the money to a personal account for his own use, prosecutors say.
7.     The former head of a Democratic Party fundraising committee in Washington state has been sentenced to over a year in prison for embezzling in excess of $300,000 in campaign contributions to feed an alcohol-fueled gambling habit, prosecutors said.
8.     Lorraine Dispaldo was sentenced to 18 months in prison after pleading guilty to 36 counts including conspiracy, mail fraud, wire fraud, filing false personal income tax returns, and bankruptcy fraud. With the help of then-Philadelphia Traffic Court Judge Robert Mulgrew, Dispaldo directed nearly $200,000 in grants awarded by the Pennsylvania Department of Community and Economic Development (DCED) to friends and family. The awards were meant to pay for neighborhood revitalization efforts, and while some improvements were made, the grants were largely used for personal benefit. Dispaldo hid the fraud by submitting the same receipts months apart, in the hopes that DCED would not notice the duplicate receipt numbers.
9.     A treasurer of the Winfield (MD) fire company was arrested last week on charges that she stole more than $220,000 from the organization. She admitted to police that she stole the fire company’s money but said she could not remember the total amount.
10.  He worked with campus police on criminal investigations at U of Vermont, but was charged with stealing $9,860 from inactive accounts.
11.  A former park ranger for the U.S. Army Corps of Engineers in Skiatook (OK) has been charged with embezzling almost $80,000 over more than six years
12.  A senior account officer for the California Highway Patrol has been arrested on suspicion of embezzlement. He was allegedly diverting state funds into a privately owned bank account.
13.  The former chief tax deputy for the Roane County (WV) Sheriff’s Department has been under investigation for nearly two years on allegations she embezzled $96,000 from the department. She was arraigned on four felony charges and entered a guilty plea..
14.  Former Clarkston  (GA) City Councilwoman Joan Swaney has pleaded guilty to embezzling more than $60,000 from a local community center.
15.  A former administrator at Fairmont State University (WV) is facing federal embezzlement and tax charges.
16.  Winsted's (CT) former finance director will wait until Jan. 24 for his embezzlement case. He is accused of embezzling more than $2 million over five years from the town of Winsted, and possibly as much as $7 million over a longer period of time.
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)
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