Nonprofit
Imperative
…Your nonprofit browser
February
2014
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:
Archdiocese of St. Paul and
Minneapolis
Charity Check Up:
CA Charity
Telemarketers
A Thought or Two:
Say No 2 Cancer,
et al
Nonprofit News-In Case You Missed It:
National Museum of
Industrial History: Girl Scouts of LA…more
Political/Official Chicanery:
MS; CA; VT; NY; CT; MT; PA; MI…more
So, What Do
You Think?
Meadville Tribune: Charities are easy
marks for theft. “It is all too common for thieves… to get away with it.” Pennsylvania
lawmakers are poised to increase the sentences for those that are convicted for
stealing from charities and local governments… and will automatically tack on
five years to the standard sentence for theft.
-------------
"For us charity fraud is particularly
pernicious. Whether it is a cancer charity — which I think is really bad — or
almost any charity, there are two victims in every charitable scam...
"There is the donor who thinks they are giving money to a legitimate
charity and are going to help somebody. But it also dilutes money that
otherwise would be available for legitimate charities. And in some ways, that
is almost worse." said Colorado deputy
attorney general Jan Zavislan
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.”
Archdiocese Spent $11million To Keep Secrets
The Rev. Stanley Kozlak served
nearly three decades in the Archdiocese of St. Paul and Minneapolis. But then
he fathered a child and the archdiocese needed him gone. Removing Kozlak
quietly wouldn't be cheap, but church leaders knew how to move money
discreetly. The archdiocese held two secret accounts, controlled by the
archbishop, designed to make problems like Kozlak disappear. It cost over $11
million.
The efforts left the Archdiocese subject to embezzlement.
The former head of accounting is accused of stealing more than $670,000 from
the Archdiocese of St Paul and Minneapolis. He has pleaded guilty to theft and
filing a false tax return. The perpetrator pleaded guilty to five felony counts
of fraud. He is now serving a three-year prison sentence.
About 3 percent of overall archdiocese
revenues in those years went for costs tied to clergy misconduct. The
archdiocese is facing a slew of lawsuits over clergy misconduct that
threatens to cripple it financially. The clergy misconduct budget was so
well concealed that a trained eye wouldn't notice the spending.
Payments associated with clergy misconduct
came from separate, secret accounts, depending on the type of behavior
involved. One such account, numbered 1-515, paid costs connected to priests
accused of sexually abusing children. Account 1-516, meanwhile, paid costs
related to the abuse of adults, or to financial misconduct. Items with these
codes included expenses for therapy costs for victims and priests.
Meanwhile, Charles Zech, director of
Villanova University's Center for Church Management and Business Ethics did a
study that concluded 85 percent of American dioceses had funds stolen between
2001 and 2006. (source)
A Charity Check Up:
In CA: Fundraisers Take Two-thirds Of Collections
Commercial fundraisers – the for-profit companies behind the
vast majority of those telemarketing appeals for charity donations – raised
almost $300 million on
behalf of nonprofits in California in 2012, according to figures
collected by the state Attorney General.
The nonprofits got just a fraction of the booty – an average
of only 37 percent, or $108 million -- and the commercial fundraisers kept
the rest for themselves. That's a steep dive from the year before, when
nonprofits got more than half the take.
A Thought or Two:
More Deceit From
Cancer Charity Fraudster
A man who
is accused of using bogus cancer charities, including Say No 2 Cancer and
Boobies Rock!, to raise at least $2 million from June 2011 to June 2013 has
been sentenced to 14 days in jail.
Denver
District Court Judge Shelley Gilman ordered Adam Cole Shryock to report to jail
after finding he violated court orders issued last summer prohibiting him from
continuing to sell merchandise, collect money or promote events on behalf of
any organization claiming to be a charity.
According
to the Colorado Attorney General's office, Shryock tried evade a court-ordered
asset freeze by asking that money raised in the schemes be sent directly to his
home.
Shryock, the founder of Boobies Rock!, The Se7ven
Group and Say No 2 Cancer, allegedly held promotions all over the country,
mostly in bars, and hired promotional models to "take donations" on
behalf of Boobies Rock, saying the company was raising money for breast-cancer
nonprofit groups.
"In reality, the 'scholarship fund' was nothing more than a cash bonus for the promotional managers and the entire scheme ran afoul of the court's orders," Attorney General John Suthers said in a statement.
"In reality, the 'scholarship fund' was nothing more than a cash bonus for the promotional managers and the entire scheme ran afoul of the court's orders," Attorney General John Suthers said in a statement.
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News
Nonprofit
News…
In
Case You Missed It:
1. Leaders of the National Association of College and
University Business Officers and the Commonfund Institute, which collaborate on
an annual survey of more than 800 North American colleges’ financial
performance, credited last year’s robust growth in value by 11.7 percent to $448.6-billion
in 2013 as a result of the healthy stock market for the endowment gains.
University endowments collectively declined in value by 0.3 percent in 2012.
2. The Tampa Bay Times, in partnership
with The Center for Investigative Reporting, has built an online tool to make
charity research a little easier. The "Charity Checker" website (tampabay.com/charitychecker), for
the first time, aggregates the ratings and reviews of 11,000 already offered by
several of the nation's most prominent watchdog organizations.
3. Australia: The charity regulator, the ACNC, has investigated complaints
against more than 200 Australian charities in its first year of operation. The ACNC’s first annual review said the majority of concerns
raised about charities were governance, fraudulent or criminal activity, and
private benefit. The public raised the majority of concerns, more were referred
by other government agencies and the remainder came from other sources and
active intelligence.
4. Delawareans will be able to validate charities
soliciting in the state before they donate under legislation that is moving
through the General Assembly. The bill requires most
non-profit and charitable organizations soliciting donations in Delaware to
register with the Consumer Protection Unit and annually submit their IRS 990
tax forms as well undergo periodic financial audits, depending on the size of
the organization. Additionally, the bill serves to provide oversight of
professional fundraisers and solicitors and their associations with charitable
organizations. The AG’s office will maintain a publicly available and
searchable database so Delawareans can check to see if a charity is legitimate
before donating. The database will also provide additional information about
the organization’s charitable purpose and how the organization spends its
donated funds.
5. A former senior manager (property manager) for the Girl
Scout Council of Greater Los Angeles has pleaded guilty to federal charges in
an embezzlement scheme. Channing Smack of Marina del Rey had been the senior
property manager for the regional scouting organization until he was accused of
embezzling $370,000 through false invoices and other means.
6. A Northampton
County, Pennsylvania grand jury is calling on the state to review and
possibly dissolve the nonprofit group behind the National Museum of
Industrial History proposed for Bethlehem, saying it may be fatally
plagued by negligence. The museum has spent
$2.4 million alone on benefits and salary for CEO Stephen Donches since 2002,
according to the grand jury report. By comparison, the nonprofit has spent
somewhere between $2.5 million and $3 million on exterior renovations. The
grand jury recommends Donches possesses no qualifications or experience needed
to oversee the start up of a nonprofit, the report states. The Express-Times reported in 2010 the museum
had spent $8 million on operating costs over a decade but still did
not have a completed museum.
We
flagged these few examples of nonprofit mischief
1.
Hilltop Apostolic
Church (CA) tens of thousands of dollars
2.
Little Scholars Inc (NJ) $200,000
3.
Blessed Sacrament
Church $400,000
4.
Girl Scouts of San
Gorgonio (CA) $5,000
5.
Readsboro Elementary
School (VT) $4000
6.
Lower Shore Enterprises Inc (DE) $70,000
7.
Arc of Ventura County
(CA) $400,000
8.
Aid for Friends (ID) $200,000++
9.
Grace Chapel Church
(NC) $200,000
10. First Baptist Church (MS) $537,000
11. Lion Education Foundation (CA) $200,000
12. East Orange Revitalization and Development
Corporation (NJ) $380,000
13. Harvest Management Group (OH) $588,121
14. Communications Workers of America Local 4202 (IL) $149,404
15. United Transportation Union (NB) $103,000
16. United Hebrew Cemetery on Staten Island (NY) $2
million+.
17. Paul Burbank Elementary School (VA) thousands of
dollars
18. International Brotherhood of Boilermakers Local 374
(IN) $10,000
Political/public official chicanery (just a few):
1. Authorities announced that a Mississippi Coast Coliseum &
Convention Center employee was arrested on a charge of embezzlement of nearly
$32,000 from ATMs owned by the state.
2. An administrative services manager of the Mid-Peninsula Water
District worker accused of stealing more than $200,000 to fund a gambling
addiction pleaded no contest to embezzlement in return for no more than five
years in prison.
3. A Warren County (MS) Grand Jury has returned a
three-count indictment against Warren County Circuit Clerk. She took about
$661,751.75.
4. An administrative law judge in Vermont has been
accused of embezzling money from Montpelier's farmers markets, of which she was
treasurer.
5.
Julissa Ferreras, the
Queens representative who was named as chairwoman of Council’s Finance
Committee, headed the board of directors of LIBRE, the Latino Initiative for Better
Resources and Empowerment, when it was looted by then-Councilman Hiram
Monserrate. She is the City Council’s new point person in overseeing the $50
billion municipal budget. As a Council member,
Monserrate steered $300,000 in city funding to LIBRE and then diverted $109,000
of the money to pay people to work on his campaign for the state Senate. He later pleaded guilty to federal mail fraud and mail fraud conspiracy
charges for the scam.
6.
A former Salisbury Fire Department Inc.
treasurer who is a lifetime member was indicted on allegations that he
misappropriated the nonprofit’s funds for his benefit during 2011 and 2012.
7.
The Los Angeles County district attorney's office
has confirmed its prosecutors and criminal investigators are joining a City
Hall effort to determine how two controversial Department of Water and Power
nonprofits have spent more than $40 million in ratepayer money. The groups were
created more than a decade ago to improve relations between labor and
management after layoffs at the city-owned utility. The organizations — the
Joint Training Institute and the Joint Safety Institute.
8.
The assistant Shelton
(CT) finance director was caught stealing nearly $500,000 in city funds.
9.
The former treasurer of
the Mayetta Rural Fire District No. 1 pleaded guilty Monday to embezzling from
the district, U.S. Attorney Barry Grissom said. In his plea, the defendant
agreed to an order that he pay $427,042 in restitution.
10. A former manager of the Fort Yukon
Native village corporation was charged this month with embezzling as much as
$118,000 from the corporation in 2009.
11. The Kent County (MI) Commissioner representing
Northwest Grand Rapids is facing felony charges of embezzling and false
pretenses in obtaining between $1,000 and $20,000 from a nonprofit or charitable
organization.
12. The former town clerk and treasurer of Luther has
been charged with embezzlement after an audit showed she apparently had used
nearly $48,000 of town funds for personal use.
13. East Palo Alto (CA) City Councilmember Larry Moody
failed to mention he might have a conflict
of interest when the council awarded the money to New Creation Home Ministries
and Able Works last November. The council has rescinded a $77,000 grant to the two local nonprofits because the
councilmember didn’t abstain from approving it last fall, even though his wife
worked for one of the organizations, reports the San
Jose Mercury News. The newspaper reports that after rescinding the
original grant, the council voted to give about $74,000 to Able Works and its
two new nonprofit partners. This time, Moody abstained from the entire
discussion after stating he had a conflict of interest
14. An indictment accuses the ex-director of Housing Montana in
Billings (MT) of embezzling money from a rural development grant program and from
homeowners in the program from about April 2008 until April 2010. The
indictment did not specify a total amount embezzled but said it was more than
$5,000.
15. Former traffic Court Judge Robert Mulgrew wants his
sentencing hearing postponed in a fraud case involving a South Philly nonprofit
he helped run. His sentencing
is in relation to his ripping off the nonprofit Friends of Dickinson Square of
state grant money. He was vice president of the group. On the second day of his
and his wife's trial in September, he pleaded guilty to one count each of mail
fraud and of filing a false personal tax return in exchange for all charges
being dropped against his wife.
16. The former CEO of a Philadelphia
charter school was sentenced to three years in prison for stealing funds from
the school. Masai Skief pleaded guilty last year to embezzling $88,000 from the
Harambee Institute of Science Technology Charter School and a related
nonprofit, the Harambee Institute.
17. Mississippi State Auditor Stacey Pickering reports Gail Williams,
former Municipal Court clerk for the Town of Prentiss, has
pled guilty to embezzling $89,620.27.
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, 2014
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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