Nonprofit
Imperative
…Your nonprofit browser
December
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:
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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News
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.
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.
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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