Nonprofit
Imperative
…Your nonprofit browser
August 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:
Breaking
the Silence:
Lack of Charity Fraud
Enforcement: Red Cross (again)
Skunk of the Month:
Oregon Prominent Politico Caught; National Children’s
Leukemia Foundation…more
Charity Check Up:
American Red
Cross
A Thought or Two:
Franklin
Graham/Samaritan’s Purse
Nonprofit News-In Case You Missed It:
American Red Cross
Failures; L.A. Water & Power Nonprofits…more
Political/Official Chicanery:
CA; LA; MI; CT; P{A; NM; WV; NH; OK; VA…more
What Do You
Think?
·
To do good, donors must do their homework
· Give Without Being Taken
“…greed among charity executives is "a surprisingly common
problem” and infractions like embezzlement may be hiding in plain sight, the
chief of the New York attorney general's charities bureau, James Sheehan,
tells New York Nonprofit Media.
…"One of the things we do tend to see a
lot of is embezzlement and fraud within the organization, often by very trusted
people, ”Sheehan said, although his office could not provide statistics, as
they said such data is difficult to track. “The classic model of an embezzler
is someone who never takes a vacation. They're very good at what they do.
People like them. They're relatively quiet.” … Not all organizations clean up
their act, Sheehan said. “We’ve seen organizations that have the same event
occur two or three times because their control process is weak."… But for those daunted
by the challenges of running a fraud-free nonprofit, Sheehan offered some
advice. “You don't always have to start your own nonprofit,” he
said. “There are a lot of good ones."
Breaking the
Silence:
Lack
of enforcement must end:
A woman said she
“betrayed” Michigan State University’s trust when she embezzled nearly $150,000
over three years. Ingham
County Circuit Court Judge Joyce Draganchuk sentenced her to five years of
probation, ordered to repay $43,000 in restitution and complete an economic
crimes program. A
second embezzlement charge was dropped.
During the
sentencing hearing, an Ingham County prosecutor said the defendant cashed in
some or part of a retirement plan to pay an initial $100,000 for restitution.
“I just want to
convey my deepest regret to Michigan State University,” the defendant said
during her sentencing hearing. “They were a wonderful employer and I betrayed
their trust.”
An internal
investigation uncovered that she made more than $130,000 worth of purchases
with her department-issued credit card, mostly for gift cards. She also bought
about $10,000 worth of computers and computer accessories
Her attorney said
the theft was “aberrational behavior” for his client, who has no prior criminal
record. He added that she isn’t a threat to the community and has demonstrated
regret for her actions.
The judge bit and
said good behavior while on probation and full payment of restitution could be
factors for an early release from probation.
It is common for the
defendant to evidence remorse after
getting caught. While in this case the majority of restitution was
received, but in most cases it is not. In very few cases does the judicial
system monitor restitution. She also caught a break on the dropping of the
second charge. She suffered little consequences as a result of her illegal
behavior.
American Red
Cross Under The Microscope:
“Who’s driving the
lack of disclosure…at Red Cross (NPR) .. it is hard to
understand why the leadership of the Red Cross cannot respond to challenges in
a way that’s confident and forthcoming and even prescient about what is likely
to be brought up. That in and of itself raises concerns about the competence… the lack of an
updated transparency and communications system is, as {Senator} Grassley
implies on behalf of donors and the public, not acceptable.
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).”
Oregon Politico Accused of Taking $1.1 million from Vets
The Oregon Department of Justice has filed an unusual
state bar complaint against prominent Republican activist Kevin Mannix,
charging that the lawyer violated ethics rules when he represented a veterans charity
that funneled $1.1 million to his political and business activities.
The bar complaint says that Mannix, the 2002 GOP nominee for governor and a
longtime initiative activist, obtained $505,000 from the charity for a
"think tank" business he owned as well as the gift of a $13,800 Rolex
watch.
The bar complaint stems from the department's
investigation and subsequent legal action against the Oregon War Veterans
Association.
NY AG Busts Children’s Charity for Multi-Million Dollar Fraud
Donors gave $9.7
million to the National Children’s Leukemia Foundation over a 4-year period. It paid out only
$57,451 in “direct cash assistance to leukemia patients” in that time.
The New York State
attorney general’s office said in a petition seeks to shut down the
Brooklyn-based foundation and recover money that the attorney general’s office
said had been raised fraudulently.
The foundation’s
Make a Dream Come True program for children with cancer was mostly a mirage since the
foundation had spent nothing on the program since March 2009.
Investigators
said the foundation amounted to a one-man operation doing business from the
basement of a home in the Bergen Beach section of Brooklyn. That one man, the
petition said, was Zvi Shor, who started the foundation in 1991 after losing a
son to leukemia. The court papers said Mr. Shor, who ran a construction and
plumbing business, had paid himself $595,000 in salary and $600,000 in deferred
compensation from 2009 to 2013, along with the promise of a lifetime pension of
more than $100,000 a year. He had been
convicted of bank fraud in 1999. In 2012, Mr. Shor transferred $655,000 to an
Israeli organization that Mr. Shor set up, supposedly for research. His wife at
the time, Susan Gardin also worked for the foundation.
The AG’s petition also said the foundation had paid for more than $30,000 in
personal expenses for Mr. Shor, including $16,615 for gasoline and tolls and
$9,000 for supplies used to renovate his house.
The foundation’s
accountant and its president did not know who the foundation’s directors were. [The New York Times]
Charity Check Up:
American Red Cross Continues To “Bleed”
More
Red Cross Bad News: “the Red Cross shelters have seemed
like ghost towns often with more volunteers than evacuees.”… They don't want to
deal with Red Cross. That's why they come here (The Loyal Order of the Moose
Lodge 2284) which has emerged as the gathering place for wildfire evacuees in
this largely rural pocket of Northern California. (NPR)
A Thought or Two:
Franklin Graham Has On-going Problems
Two full-time jobs: He receives $620,000 for his full-time job, leading
Samaritan’s Purse, an international relief agency, Franklin Graham’s 2013 compensation from Samaritan’s Purse alone made him the highest-paid
CEO of any international relief agency based in the U.S. He also makes as head
of the Billy Graham Evangelistic Association $258,667. His son, Will Graham,
got about $173,000 in compensation as vice president of BGEA. His sister, Anne
Graham Lotz, and cousin, Melvin F. Graham, were unpaid members of the charity’s
board. (charlotteobserver)
Nonprofit
News…
In
Case You Missed It:
1.
On
the heels of a report to Sen. Charles Grassley about how the American Red Cross
spent it money as a result of the Haiti Earthquake in 2010, internal documents newly obtained by ProPublica and NPR call into
question whether the Red Cross itself has an accurate accounting of how money
was spent.
The report concluded that the Red Cross’ figures on the
number of people helped in a hygiene promotion project were “fairly
meaningless.” The reports,
assessments from 2012 of some of the group’s health and water projects,
conclude that the charity failed to properly track its own spending, oversee
projects, or even know whether or not they were successful.
As ProPublica detailed in an earlier story,
the Red Cross took much of the nearly $500 million donated for Haiti and passed
it on to other aid groups, keeping a portion to cover its overhead.
The Red Cross’ oversight of some of those grants
– $10 million for cholera projects – was so poor that “at least one partner
mismanaged their funds unbeknownst to ARC,” one report says, using the acronym
for the American Red Cross. The Red Cross also did not assess whether the
cholera projects were effective. “None of the cholera program partner’s work
has been evaluated by ARC and ARC doesn’t know for sure
if the objectives were achieved.”
The internal assessments lay much
of the blame on American Red Cross headquarters in Washington.
Update: Senator Grassley, who
posed questions to the ARC, was not satisfied. The Red Cross did
not answer a question about how much the
group spent on managing projects that it outsourced to other groups. The Red
Cross said it still has not spent some of the money raised for Haiti. Of the
$488 million raised, it has spent around $400 million.
2.
The Los Angeles
Department of Water and Power (DWP) has done little to change practices at two
utility nonprofits accused by auditors of “cavalier” spending after receiving
more than $40 million in ratepayer money, even though they promised reforms
months ago, reports the LA Times. One administrator charged more than $30,000 in gas and
carwashes on his nonprofit-issued credit card between 2010 and 2014, auditors
found. Another charged more than $660,000 for things such as steak dinners and
trips to Las Vegas, Hawaii and New Orleans, recommended much stricter travel
policies and controls on credit card spending. City leaders had almost no idea
what had been done with the $40 million.
3.
Revered Rabbi Yoshiyahu Yosef Pinto’s
charity had spent tens of thousands on a high-end hotel, fine men’s clothing
and jewelry, among other luxuries. His American organization, Mosdot Shuva Israel. was one of a sprawling network of charities and yeshivas. He
bought the elegant More Rabbi Marc Schneier’s Hampton Synagogue. Pinto’s
organization paid $28.5 million in March 2009 for the new headquarters.
Rabbi Yoshiyahu Yosef Pinto will report to an
Israeli prison to serve a year behind bars after pleading guilty to bribery charges. Pinto’s
wife passed an envelope stuffed with 100,000 Swiss francs — worth roughly
$100,000 — to the wife of Ephraim Bracha, a general in the Israeli police.
Bracha, unbeknownst to Pinto, was working with prosecutors.
4.
The campaign funds for
now-Senate Majority Leader Mitch McConnell and fellow Republican Sen. David
Vitter were diverted with more than $1 million put into his own accounts to pay
for a lavish lifestyle of vacation homes, luxury vehicles and jewelry, federal
prosecutors. Samuel K. Pate Jr. pleaded guilty. He stole from 18 clients, including political
campaigns, political action committees and non-profit groups.
We flagged these few examples of
1.
The Save A Life
Foundation (SALF) (GA) $3 million
2.
Nathan Hale School PTO
(CT) $23,000
3.
College of Southern
Idaho $530,000
4.
Emory University
$300,000
5.
Systems and
Abilities, Inc (NY) $22,000
6.
Fraternal Order of
Eagles $1600
7.
Azusa City Employees Federal Credit
Union (CA) $272,000
8.
State Employees Association (NC) Over $100,000
9.
Detroit Metro Stars
Baseball league $20,000
10. C&O Conservation and Maryland Energy Conservation $1.5 million
11. Bristol Public Library Foundation (VA) $21,000
12. Laborer’s Local 1197 (IL) $27,000
13. El Camino High School (CA) $10,000
14. Lowell Holy Ghost Society (MA) $10,000
15. Supporting Cast, a Bedford High School Booster Club
(MI) <$20,000
16. Hinton Little League (WV) $38,000
17. Iron Gate (OK) $10000
18. New Berlin Soccer Club (WI) $12,000
19. Buckhannon Youth Football League (WV) $27,000
20.
Veteran charities:
·
Oregon War Veterans
Association $1.1 million
·
Veterans Support
Organization (TN) tens of thousands
·
Veterans Helping
Nevada
·
Disabled American
Veterans (VA) unknown
21.
Cancer charities:
·
WishWarriors (CA)
unknown
·
Oklahoma fake breast
cancer charity unknown
·
Florida Fake Cancer
Charity $4400
·
American Association for Cancer Support
Inc (TN) over a million dollars
·
Gloria Gemma Breast
Cancer Research Foundation (RI) $214
·
"Jazz for Life
Foundation," $150,000
Political/public official chicanery (just a few):
1. The former office manager for the Riverside Police
Officers’ Association has admitted to grand theft and a $337,000 embezzlement
and was ordered to serve time in prison and repay thousands of dollars to the
association.
2.
A
former Town Court clerk is accused of stealing more than $33,000 from the town
of Castile in Wyoming County (LA).
3.
The chief of the Town of Middlebury (CT) Fire Department is under investigation
for stealing $70,000
4.
3fer: A
fifth-grade teacher at Novi (MI) Meadows Elementary had been caught stealing
funds from the school five years ago, is being investigated again. In 2010 Novi Police caught him on camera stealing
from an envelope in the school mailroom. He also admitted to previously
stealing more money. He was sentenced to six months probation and 10 hours of
community service; was required to attend the misdemeanor offender program; was
fined $440; was suspended 20 days without pay; and was under strict monitoring
by the school district. At the time, his salary, for the 2009-10 school year,
was more than $85,000, but he said he stole for some lunch money. Now the
Oakland County (MI) prosecutor has charged him with one count of second-degree
criminal sexual conduct, which is punishable by up to 15 years in prison.
5.
Using about $600,000 in
charitable and federal grants filtered through a non-profit –– the Educational
Advancement Alliance (EAA) –– he created and headed, PA Rep. Chaka Fattah was
indicted on 29 federal counts, including bribery, money laundering,
falsification of records, and multiple counts of bank fraud, among other
charges.
6.
A former employee of the Southeastern Connecticut Water
Authority who embezzled more
than $44,000 from the agency to pay her bills was sentenced in New
London (CT) Superior Court to four months in prison.
7. The fleet service manager for Santa Fe County’s
Public Works Department was arrested on charges of embezzlement and conspiracy
to commit embezzlement.
8. The Wayne County (WV) Commission
meeting started with an unexpected check from Wayne County Assessor Eric
Hodges. Hodges was arrested this week and charged with embezzlement, computer
fraud and fraudulent use of a purchasing card from the Commmission
9. A former Oroville mayor and court fraud expert pleaded no contest to two
counts of grand theft by embezzlement of $228,000
10. The now imprisoned former Farmington (NH) fire
chief misappropriate more than $270,000 over a number of years that should have
gone into Farmington Fireman's Relief Association (FFRA) financial accounts
11.
Oklahoma State Sen.
Rick Brinkley, accused of embezzling more than $1 million to support a hidden
gambling habit, resigned from the Oklahoma Legislature
12.
A former town police
officer pleaded no contest to seven counts of embezzlement after authorities said he stole close to $35,000 from the Virginia
Bloodhound Search and Rescue group.
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.
We’re
noticed: 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, 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, 2015
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