Nonprofit
Imperative
…Your nonprofit browser
September 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:
Good Shepherd Lutheran Church; Background Checks, again;
Autism Charities
Charity Check Up:
American Red
Cross
A Thought or Two:
American
Hero Caught
Nonprofit News-In Case You Missed It:
Breckenridge (CO) Film
Festival; ‘Ice Bucket Challenge’; Livestrong …more
Political/Official Chicanery:
MI; PA; RI; OK; CA; WA; VA; NY; IN…more
What Do You
Think?
“Boards are almost
exactly as they were a hundred years ago: a collection of grey eminences who
meet for a few days a year to offer their wisdom. They may now include a few
women and minorities. There may be a few outsiders. But the fundamentals remain
the same. Board members are part-timers with neither the knowledge nor the
incentives to monitor companies effectively. And they are beholden to the
people they are supposed to monitor. Boards are thus showcases for capitalism’s
most serious problems: they are run by insiders at a time when capitalism needs
to be more inclusive and are dominated by part-timers at a time when it needs
to be more vigilant about avoiding future crises.” (August 15 issue of The
Economist) (h/t EO Tax Journal) (see Nonprofits In The News, #7 below)
--------------
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 (for themselves).”
No Governance, No Enforcement But Who Cares?
Deborah Suchomel took more than
$106,000 while serving as council secretary and preschool bookkeeper for Good
Shepherd Lutheran Church between October 2005 and April 2013. During that time
she had written checks to herself for cash. The embezzlement was discovered
after the IRS contacted the church about unpaid taxes. In May she pleaded
guilty and was sentenced recently to four years probation for embezzling
thousands of dollars from the Romeoville (IL) church. She paid $26,987.26 in
restitution to the church.
The Rev. Suzanne Anderson-Hurdle said
that this embezzlement caused her to trust people less. I trust my instincts
less. She further told the judge "The outlook our church will survive is
not good."
This is a typical example of a total
lack of good business practices, little governance and no accountability. There
is little enforcement of charity crimes. The perpetrator gets off with a slap
and seldom makes the organization whole. Where is the disincentive to not
steal?
Background Checks Are A Must
Clayborn Collins, the chief executive of Emmanuel Community Services, has lied on his resume, omitted some of his criminal record on state
disclosure forms and embellished his personal biography when
applying for numerous government grants and contracts to fund his North
Portland nonprofit. Collins has raised more than $1.2
million in public money over the past seven years. Collins has claimed he earned both a doctorate and a master's degree from
the prestigious London School of Economics and Political
Science. On a state background check last year, he touted a master's
degree in divinity. None of this is true, records show. Collins has portrayed his organization as a
protector of women and as an advocate for domestic violence programs. But
records show two women have been granted restraining orders against him
alleging domestic violence. He has been convicted of theft, forgery and a
gun-related crime and owes more than $170,000 in penalties, interest and back
taxes to the state of Oregon and the Internal Revenue Service. Where was the
Board?
------------------------
Autism Charities Is
Piggybank for Founders
For the second time, Brandie
Christian was caught in a scam involving assistance to children with
autism.
Just two years ago, the state
Attorney General’s Office forced the closure of one charity, Autism Awareness
United, following allegations of malfeasance there. Christian worked for that
charity, which saw donated money misspent prior to its closure.
After that closing, Christian and her husband launched Autism
Outreach Foundation. They incorporated the charity as a nonprofit in December
2012, naming friends and family to its board before beginning to
collect donations. The
charity brought in well over $400,000 since its founding, but only $4,000 has
been distributed to needy families. She spent donations on designer jeans,
trinkets from a Vantage gem shop, skin care products and shoes, according to a
lawsuit and also made cash withdrawals from the charity account. Thousands of
dollars in donations remain unaccounted for.
The state consumer protection investigators contend she and
husband Joshua Hani have been scamming donors to the charity they launched.
Attorneys for the state filed a civil lawsuit against the pair in an effort to
shut down the Autism Outreach Foundation. The organization – which hasn’t
issued a single grant to a struggling family in 2014 – appears to still be
collecting money from donors. (source)
Charity Check Up:
American Red Cross Reverses Itself on ‘Trade
Secrets’
Under
immense amount of pressure from the New
York attorney general's office and ProPublica, the
American Red Cross reversed itself and has released new details on how the American Red Cross
spent the more than $300 million it raised following Superstorm Sandy.
Previously, the charity suggested that such information was a 'trade
secret'.
The revelations are part of a 108-page document the Red Cross sent ProPublica,
which for months has been pushing the group to further explain how it
distributed funds earmarked for Sandy relief.
In an additional note provided with a letter, the Red Cross said
that as of June 30, 2014, it had spent $239 million on post-Sandy relief and
made "firm commitments" to spend almost all of the rest of the $312
million raised. It also broke its expenditures into seven categories, a level
of detail not given in its annual reports or tax filings.
More than half the money spent, $129.6 million,
went to financial assistance, food, and other relief items, the Red Cross said.
The next-largest expenditures were $46.1 million for "deployment of staff
and volunteers (e.g. air travel, rental vehicles, meals, lodging for
volunteers)" and $30 million for "costs of permanent program
resources included in Superstorm Sandy response."
The group said it spent smaller amounts to pay
temporary disaster workers, to acquire or rent equipment, and on miscellaneous
operational costs. Nearly $5 million went to professional and consulting
services for events like telethons and direct mail fundraising.
The full letter from the Red Cross on Sandy fundraising and
spending can be read here.
A Thought or Two:
American Hero Sentenced For Charity Theft
President Bill
Clinton presented him with the nation's top recognition for volunteers, the
President's Volunteer Action Award, in a Rose Garden ceremony at the White
House.
And his program to
take leftover food from restaurants, hotels and groceries and give it to the
hungry — USA Harvest —was championed by stars ranging from the Goo Goo Dolls to
actress Scarlett Johansson, who auctioned off her used facial tissue on Ebay
for $5,300 to benefit the charity. He was a philanthropic superstar who was
once honored by Dr. Norman Vincent Peale with an award dubbed the "Nobel
Prize for Goodness."
Now Hugh Vanderbilt
"Stan" Curtis was sentenced
to two years in prison for stealing $183,354 from USA Harvest. Curtis, who
pleaded guilty in June, also must pay restitution in that amount to Kentucky
Harvest, another charity he founded but wasn't running at the time of the
thefts from USA Harvest, which is now defunct.
Nonprofit
News…
In
Case You Missed It:
1. The former director of the Breckenridge (CO) Film
Festival, who pleaded guilty to embezzling up to $300,000 from the non-profit,
was sentenced to five years in prison. She also stole thousands of dollars from
her ex-husband and his former business partner.
2. A report issued in July by the Treasury Inspector
General for Tax Administration reports that approximately 64,000 or 3.8 percent
of all tax exempt organizations (numbered at 1.7 million in 2012 in this
report) owed at least $875 million in unpaid taxes to the federal government as
of June 2012. Sixty-nine percent of this debt was in unpaid payroll
taxes. The remainder of the debt is made up of reporting penalties (4%), excise
taxes, unrelated business income and other taxes. While the problems in the
report are limited to very few nonprofits, this is a reminder to all of the
obligation that nonprofit employers have to their employees and federal and
state government to meet all tax filing and payment obligations,” said Kate
Barr of the Nonprofit Assistance Fund,
3. The “Ice Bucket Challenge” has lit social media on
fire, raising both money and awareness for amyotrophic lateral sclerosis,
commonly known as Lou Gehrig’s disease. People have shared more than 1.2
million videos on Facebook between June 1 and Aug. 13 and mentioned the
phenomenon more than 2.2 million times on Twitter since July 29, according to
those sites. Donations to the ALS Association have spiked. As of August 17th, the
association said it had received donations over $100 million since July 29,
compared with $1.7 million during the same period last year. It said there were
hundreds of thousands new donors.
4. The Livestrong Foundation announced that it is making a major
strategic move — giving a $50 million gift to the University of Texas at
Austin's new Dell Medical School to create the Livestrong Cancer Institutes.
Originally called the Lance Armstrong Foundation, the cancer-fighting
organization changed its name in 2012 following the infamous doping scandal
involving its founder and namesake, who was ultimately pushed out as the
organization’s chairman.
5. Michelle Rhee had big ambitions but she leaves
a trail of disappointment and disillusionment, as she prepares to step down as
CEO at StudentsFirst. Her next step in life, which will be focused on “my
family and supporting my husband,” Sacramento Mayor Kevin Johnson.
6.
Budget pressures at the
Internal Revenue Service's Criminal Investigation Division are cutting the
number of investigators there to the lowest level in four decades, and
officials say the changes are forcing the division to scale back its fight of
financial crime.
7. An examination of the finances United States Tennis
Association by The New York Times shows that several of the group’s current and
recent board members have benefited from U.S.T.A. grants and contracts, raising
questions about the unofficial perks available to the men and women at tennis’s
highest rungs. The organization is largely exempt from paying federal taxes on
about $213 million it generates in revenue
8.
Changes in medicine have eliminated the
need for millions of blood transfusions, which is good news for patients
getting procedures like coronary bypasses and other procedures that once
required a lot of blood. Transfusions are down almost one-third over the last five years, to
about 11 million units last year from about 15 million units, according to the American Red Cross, which has about 40
percent of the market.
9.
After Superstorm Sandy
hit the East Coast nearly two years ago, the federal government quickly sent
out $1.4 billion in emergency disaster aid to the hurricane's victims. The Federal Emergency Management Agency is
scrutinizing about 4,500 households that it suspects received improper payments
after the storm, according to program officials and data obtained by The
Associated Press through a public records request. As of early September, FEMA
had asked around 850 of those households to return a collective $5.8 million.
We flagged these few
examples of nonprofit mischief
1.
Merced College (CA)
$363,000
2.
Delta College (CA)
$4600
3.
Harmony Thrift Shop
(TX) about $15,000 a month
4.
Yosemite National Park
Child Care Center and the Yosemite Child Care Center (CA) $43,000
5.
American Kidney Fund
(AKF) (TX) $66,000
6.
Helping Out, LLC and
Smiles for Kids Foundations (IL) $122,000
7.
Indian Knoll Elementary
School’s PTA /Sequoyah High School girls soccer booster club $18,000
8.
Cornerstone Community
Center (OK) $1 million
9.
Grayling High School
Spirit Club/Grayling
Little League (MI) <$20,000
10. Joy Foundation (GA) $150,000
11. Old Prison Museums (MT) $70,000
12. Lander University (SC) $400,000
13. Whistlestop (CA) $60,000
14. Heartland Crime Stoppers (MO) $3300
15. Lehigh County
Conference of Churches (PA) $380,000
16. Chad Oulson “Living Survivor” Fund (FL) $7000
17. Hillsboro School Parent
Teacher Organization (MI) $20,000
18. River Oaks Christian Church (OK)
$90,000
19. Lifegate Church (NB) $9000
20. Brookfield Church of the Nazarene (MO) $200,000
21. First United Methodist Church of Stillwater (OK) $141,000
22. Harvest Management Group (OH) $590,000
23. Riverside High School (WV) unknown
24. Muhlenberg Township Athletic
Association (PA) $62,000
25. Jewish National Fund (NY) $181,000
26. Mississippi University for Women $28,000
27. Morgan State University $105,726
28. U.S. Marshals Survivors Benefit Fund and
BackStoppers Inc. (MO) unknown
29. Elf Khurafeh Shriners (MI) $1.8 million
30. Athens-Limestone Habitat for Humanity (AL) $108,000
31. Lake Oswego (OR) Chamber of Commerce $25,000
32. Spartanburg High School (SC) over $10,000
33. Sons of Malta Motorcycle Club (MI) unknown
34. Mail Handlers Local 314 (MO) $41,000
35. Visit Philadelphia $210,000
36. Clinton Valley Little League (Mi) $300,000
Political/public official chicanery (just a few):
1.
Patricia Ann Davis'
embezzlement from Kalamazoo Public
Schools began small, but
it snowballed to the point she lost count of how much she had stolen. In the
end, the former administrative assistant in the human resources department
stole for 7 years without notice.
2.
A Masontown (PA)
councilwoman is accused of taking $1,610 from Masontown Matters, a community
nonprofit, while serving as its treasurer, according to investigators.
3.
A Kent County (RI)
District Court senior clerk, who pleaded not guilty in May to stealing $15
thousand from the court, was fired.
4.
A former Northern
Oklahoma Development Authority executive director faces a $23,000
embezzlement charge. He was in the position for just 13 months before the agency discovered the problem.
5.
A former Gibson
Township (MI) treasurer is charged with embezzling $77,000 over a four-year
period.
6.
Former city employee
pleaded guilty to nine counts of second-degree theft in King County (WA) Superior
Court admitted to embezzling more than $117,000 from the city of Bellevue by
falsifying charges made with municipal credit cards to her private bank
account.
7.
A former Vicksburg Village (MI) Manager
is headed to trial on embezzlement charges. Matt Crawford resigned in February
of last year after working for the village for 12 years. He's accused of
embezzling money or property between June of 2009 and December of 2012.
8. The California State Auditor’s office discovered $94 million
in potentially fraudulent payments and more than 300 services approved for dead
people in a searing review of the state’s drug rehabilitation program for the
poor. The state’s oversight failures created opportunities for privately run
clinics to fleece the state, and its process for approving rehab clinics was so
“woefully inadequate” that it put federal funding for the program at risk,
according to the released audit.
9. A former executive with the Bristol (VA) Library
Foundation was arrested and charged with embezzling thousands of dollars during
her tenure, police said.
10.
The treasurer of
Harrisburg (PA), which nearly went bankrupt three years ago, was accused by
prosecutors of embezzling from Historic Harrisburg Association, a nonprofit
organization he ran.
11. A former police officer in Montgomery County (VA) has been
indicted on embezzlement charges. Ex-Christiansburg officer Stephen Kilby was
indicted on charges that he stole $34,000 from the Virginia Bloodhound Search
and Rescue Association.
12. He ran the Roosevelt Water Association (WA) but stole more than $400,000
to pay his credit card bills, court records
show.
13. Former Lee police chief Joseph Buffis is facing new
federal charges for allegedly pocketing more than $50,000 meant for Christmas
gifts for underprivileged children. Buffis is also facing charges for allegedly
convincing the town of Lee to provide the police department in 2011 with four
iPhones that he and his family used, instead of distributing them to the other
police officers. Phone bills totaling more than $5,000 were then paid by the
town in the belief the phones were being used by the department since Buffis
hadn't disclosed that he had diverted the phones for the personal use of his
family, according to court papers.
14. Grand Isle County Treasurer Theresa
"Terri" Blow admitted to a federal judge that she stole roughly
$105,000 from the county courthouse ($40,000), a parent-child center ($63,000) and
from a lawyer ($3,400).
15. A board member at the West Basin (CA) Municipal
Water District was sentenced to 180 days in jail after pleading guilty in an
embezzlement case involving his agency and a local nonprofit group.
16. Former Halifax County (VA) Supervisor and former
Halifax County School Transportation Coordinator were indicted for
stealing from Halifax County Public Schools.
17. Arlis Victor Reynolds, former police chief of
Windsor, turned himself in to Virginia State Police. He was charged with
obtaining money under false pretenses and embezzlement. Both charges were
handed up by an Isle of Wight County Grand Jury
18. Melvin E. Lowe, a New York political consultant, was found guilty of
conspiring with State Senator John Sampson of Brooklyn to defraud the New York
Senate Campaign Committee out of $100,000. Sampson is under indictment on unrelated
charges of embezzlement, obstruction of justice and making false statements to
the FBI. He allegedly embezzled $440,000 from escrow accounts on foreclosed
properties.
19. A former La Porte County deputy auditor has been
indicted by a federal grand jury in the Northern District of Indiana for
embezzling more than $150,000 from the La Porte County government and
committing tax fraud.
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, National Enquirer, The Patriot-News, Vermont
Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, In Touch, 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
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