Nonprofit
Imperative
…Your nonprofit browser
January 2015
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:
‘A real scandal down the road’
Charity Check Up:
Roxbury
Comprehensive Community Health Center
A Thought or Two:
New
Covenant Christian Fellowship Center
Nonprofit News-In Case You Missed It:
Princess Cristina of Spain;
IRS Scandal; Giving…more
Political/Official Chicanery:
VA; WI; KY; CA; VT; MS; MN; NH; MA; Pa…more
What Do You
Think?
A BANNER YEAR FOR
FRAUD: Exposed embezzlement by paid employees and volunteer workers at public
and for- and nonprofit organizations nationwide grew in 2013 by 5%
according to the 2013 Marquet International Ltd. Report on Embezzlement.
Nonprofits and religious organizations together account 11.9 percent of all
cases. They represent only 5.4 percent of GDP. (Urban Institute) ------------------
A Harris Poll found that 17.6
million Americans lost an estimated $8.6 billion to phone fraud in 2013. Urgent requests for recent disaster relief efforts
are especially common on the phone. (The Jackson Sun)
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).”
Nonprofit Sector Facing A Major Scandal?
The nation's nonprofit sector is
proliferating, just as resources available to federal and state oversight arms
shrink or stagnate. Marcus S. Owens has observed troubling trends since
stepping down as director of the Internal Revenue Service's exempt
organizations division 14 years ago.
The number of American nonprofits
filing annual returns nearly doubled in the past decade, up to nearly 1.1
million in 2013, IRS data show.
Meanwhile, the IRS lost the
equivalent of more than 12,000 full-time positions and nearly $1 billion. In
2013, the IRS examined 0.71 percent of charitable organizations, down from 0.81
percent in 2011 and lower than rates for individuals (1 percent) and
corporations (1.4 percent), the Government Accountability Office wrote in a report this month.
“The agency's attitude toward
tax-exempt (oversight) seems to be moving to one of, ‘It's not worth the
hassle,' ” said Owens, who spent 25 years with the IRS before taking a job as a
Washington attorney.
“I think it's setting the stage for
a real scandal down the road.”
Its big money:
By the numbers
• $137 billion —
Government paid to American nonprofits in grants and contracts for services in
2012
• $48 billion — Cost of
federal tax deductions for contributions to charities in 2013
• 1.63 million —
Tax-exempt organizations in United States
• 274,000 — Charities
filed tax returns in 2013
• 0.71 percent —
Charities audited by IRS in 2013 (source)
Charity Check Up:
Decimated Agency and Conflicts Ignored By
Governor
In the last few years
that Ronald L. Walker II served as chairman of the board of Roxbury
Comprehensive Community Health Center, his own business — Next Street
Financial — charged the center hundreds of thousands of dollars in consulting
fees for board development and strategic planning, documents show. This ended
in a financial collapse. In spite of that Governor-elect
Charlie Baker named Walker the state’s next secretary
of Labor and Workforce Development, Heralding his work as a cofounder of Next Street Financial,
which is a merchant bank that invests in small businesses and advises
entrepreneurs in urban areas.
Walker had been among those meeting with federal
regulators, who detailed the many program requirements RoxComp was failing to
meet and specifically cited Next Street’s contract as a concern, said one
former employee who had direct knowledge of the situation.
The regulators also faulted the health center
for failing to require board members to disclose potential conflicts of
interest. Both concerns were echoed in a draft of the report later issued by
the federal regulators.
By then, Walker apparently had stopped working
with the board, although verifying the exact date is difficult given the lack
of record-keeping at the center.
Board oversight and
governance problems were heavily criticized in federal reports on the center
that preceded its demise. Walker’s company was paid since 2008 to strengthen
the center’s planning and governance. Board oversight and governance problems
were heavily criticized in federal reports on the center that preceded its
demise. Walker’s company was paid hundreds of thousands of dollars since 2008
to strengthen the center’s planning and governance.
The bureau faulted the
health center’s board for lack of preparedness, saying they had “little if any
formal Board orientation or ongoing training and development,” according to the
draft report. “Not all of the Board members clearly understood their roles and
responsibilities or liabilities as a Board member.”
The center still owed
employees $266,722 and owed the city $25,859 and the state Division of
Unemployment $761,400, according to court documents.
A Thought or Two:
Nonprofit Charter School Opens Up On “trade secrets”
After a massive and
costly renovation of the 13,000-square-foot building and six months later, New
Covenant Christian Fellowship Center, Church of God in Christ opened its doors.
Just beyond those doors is a giant portrait of Pastor Wooten was hung.
Barely three years later, the church’s founder
is behind bars, accused of embezzling $6.4 million from the city of Pasadena
(CA), where he was employed as a management analyst in the Public Works
Department. Using fake invoices,
more than two-thirds of the fund’s total payments were stolen over the course
of a decade, according to an audit of the fund.
Wooten allegedly
directed more than $700,000 of the stolen funds to an account bearing the
church’s name. Wooten also allegedly directed $2.1 million to
the Southern California Evangelistic Jurisdiction Center. Despite its
similarity in name to New Covenant’s parent organization, Bishop Milton says
they are not related.
He said the two churches named in the embezzlement scheme are “affiliated with
Pastor Wooten alone.”
Beyond the churches, a lot of entities are affiliated with the name
Danny Wooten. Karate companies, a preschool, a music studio, a magazine,
various nonprofits — Wooten has started them all, according to state business
license and tax records. And in addition to being a pastor and city bureaucrat,
the North Carolina native is also an author and playwright. Some say womanizer,
crook and maybe even abuser should be added to the list, according to city and
court records.
And despite his varied entrepreneurial ambitions,
court records also show Wooten has time and time again found himself in rough
financial waters — facing bankruptcy, evictions, tax liens, and thousands of
dollars in back child support.
The church is funded entirely through member offerings and receives no
funding from the Church of God in Christ, Bishop Milton said. And though its
website (taken down following Wooten’s arrest) said it has 100 active members,
videos of Sunday sermons on its Facebook page show a more sparse crowd.
Tax forms for the non-profits show $0 in income, but they are incomplete
and such forms are not even required for organizations that earn less than
$50,000. (source)
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News
Nonprofit
News…
In
Case You Missed It:
1. MADRID -Princess Cristina of Spain was
ordered to stand trial along with her husband, Iñaki Urdangarint ---the
first direct member of the royal family in modern history to answer charges in
court. Cristina’s problems
stem mostly from her role in Aizoon, a real estate and consulting company that
she owned with her husband. Aizoon is one of the companies that Urdangarin is
alleged to have created to siphon fees paid to his Nóos Institute, the
foundation that he used to organize sports events.
2.
The House Oversight and
Government Reform Committee released its latest report on the IRS “scandal” and
its final report under the chairmanship of Darrell Issa (R-Calif.). After
spending the last year and a half on its investigation, the committee has not
found any evidence that the Obama Administration orchestrated the
“scandal.” The most the committee could find is “flagrant and
pervasive management failures by Washington [IRS] officials.” The report
represents findings from the review of over 1.3 million pages of documents and
52 transcribed interviews with IRS, Treasury, and Justice Department employees.
The report’s conclusion reads in part that Conservative organizations were not
just singled out because of their political beliefs—they were targeted by IRS
officials and employees who expressed a general loathing toward them even while
begrudgingly admitting that those organizations were in compliance with the
only thing the IRS should care about---the federal tax code.
3.
Online giving in December
rose nearly 13 percent compared with the same month a year earlier, according
to a sample of more than 10,000 groups that use the online-donation processor
Network for Good. The total for December—$44.1-million—was boosted by
particularly strong giving at the very end of the month. Network for Good said
it processed $9.9-million in charitable donations on December 31, more than
double the amount given on December 30, the next-most lucrative day that month.
The last-day-of-the-year sum reflected donations from 42,559 people, an
increase of more than 76 percent over the number of people who donated the
previous day. The last week of the year netted $21.8-million in Network for
Good donations, given by 101,968 people. The total for the month represented an
increase of 49 percent above December giving in 2011. (source)
4.
Less than a year after
the Detroit Institute of Arts promised to contribute $100 million to the
so-called grand bargain rescue fund at the core of the city's bankruptcy
restructuring plan, the museum has crossed the finish line.
We
flagged these few examples of nonprofit mischief
1.
Pembroke Friends of Football (NH)
$13,000
2.
Larimer County Child Advocacy Center (CO) $17,500
3.
Progressive Community
Services (MO) unknown
4.
Newton County Community
Services (IN) $38,000
5.
Spring Hill College (AL) $186,000
6.
Traverse City Area
Public Schools (MI) $58,000
7.
CMS Cheer boosters (NC)
unknown
8.
Association of Africans
Living (VT) $34,000
9.
South Arsenal
Neighborhood Development Corp (CT) $205,000
10. Casper Youth Baseball (WY) more than $65,000
11. Brotherhood of Locomotive Engineers and Trainmen,
Division 261 (KS) $17,000
12. Idaho Select, Inc. $1.6 million
13. University of Nebraska at Kearney $32,049
14. Advance (SD) $37,000
15. Allied Veterans of the World (FL) $571,000
16. McLean County Deputies Fraternal Order of Police $100,000
17. American Postal Workers Union (APWU) (SD) $37,000
18. Service Employees International Union Local 323 (OH) unknown
19. Mary Bird Perkins Cancer
Center (LA) $70,000
20. Navy SEAL Foundation (VA) not disclosed
21. Traverse City Area Public School (MI) $58,000
22. Greater Cornerstone Community Development Project
(OK) $1 million
23. Friends of the Conservatory at Volunteer Park (WA)
$86,000
24. Association of Africans Living in Vermont $34,000
25. Mighty Oaks Children's Therapy Center (NY) multiple
thefts
26. New Jersey Youth Club $190,000
27. Harbor Humane Society (MI) $4800
Political/public official chicanery (just a few):
1.
The
former chief of contracts for International Relief & Development (IRD) in
Arlington Va., one of the largest non-governmental organizations to work in
Iraq and Afghanistan, has been indicted on federal bribery charges. Prosecutors say he accepted $66,000 in bribes in exchange for directing
work to the Afghan subcontractor
2.
Robert Davis, a
self-proclaimed reformer who rallied against corruption in government in a
series of lawsuits, is going to prison for 18 months for the same types of
crimes he railed against….$200,000 embezzlement in MI
3. The
former executive director of the Department of Family and Geriatric Medicine at
the University of Louisville School of Medicine has pleaded guilty to stealing $2.8
million
4. The L.A. County district attorney's office has
charged a city employee and two others in an alleged decade-long embezzlement
scheme that involved more than $6
million in public funds. The allegedly generated false invoices from a
Pasadena-based company for undergrounding utility work, and the company,
in turn, cut checks to him and churches with which he was
affiliated. "We failed as an
organization and as a staff to allow this to happen," the city
administrator said. (see A Thought or Two above)
5.
A former Camptonville
(CA) postal worker is charged with embezzling more than $9,500 through a money
order scheme.
6.
A former Weybridge (VT)
town clerk and treasurer convicted of stealing more than $400,000 from the town
lost a bid to have her two-year prison sentence cut short. She served as town
clerk and treasurer for 27 years in the community of less than 1,000 residents,
pleaded guilty in March 2012 to embezzling $412,793 from the town throughout a
six-year period.
7.
The former Stone County
(MS) Economic Development Partnership executive director is accused of
embezzling more than $24,000.
8.
A former fire Jenny
Lind Fire Protection District (CA) secretary was sentenced to 180 days in jail
and five years probation for embezzlement of $88,000
9.
A former treasurer of
the Minnesota State Fire Department Association is charged with embezzling
$188,000 over 4 years.
10. A longtime Troy (NH) official is charged in
connection with the embezzlement of thousands of dollars in town funds over a 6-year
period.
11. Brimfield’s (MA) former treasurer has
pleaded guilty to embezzling about $80,000 from the town.
12. Officials with the Owosso (MI)
Fire Department thought they were receiving a $5,600 check from a local
nonprofit organization. Instead, they received nothing. Now, it is alleged that the man
who was responsible for donating the proceeds from an annual fundraiser held
last spring kept it for himself — to spend on personal bills and casino
gambling.
13.
A Masontown (PA)
councilwoman who is accused of taking $1,610 from a community nonprofit while
serving as its treasurer has resigned her seat, according to the mayor. She is
charged with several misdemeanor counts in connection with the alleged theft
and doctoring of bank statements for Masontown Matters.
Readers, weigh in as to what you think…please 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, National Enquirer, The Patriot-News, Vermont
Public Radio, Miami Herald, New York Times, 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, , 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,
· 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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