Nonprofit
Imperative
…your nonprofit browser
December 2015
The
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:
Priest: $573 K Theft;
Fundraisers Take $7 Million
Breaking
the Silence:
Ecumenical Refugee &
Immigration Services
Charity Check Up:
A C Transit-$650K
embezzlement
A Thought or Two:
Teen
Ortho Foundation- $8 Million Loss
Nonprofit News-In Case You Missed It:
FL. Fundraising Firms Under
Scrutiny; Giving Around The World; Central Asia Institute…more
Political/Official Chicanery:
GA; MI; MS; UT; OH; PA; CA; LA; IL; WI;
TX; CO; FL; MN; MD…more
What Do You Think?
·
To do good, donors must do their homework
· Give without being taken
Reprinted from the Nonprofit Quarterly, November 17, 2015
“It is with deep sadness that we let our readers know our beloved Rick Cohen passed away [today, November 17]. His loss will be inestimable to many of you, as it is to us. Rick will be remembered for his integrity, his powerful and nimble intellect, his unyielding courage in pursuit of truth, his commitment to social justice, and his humor. Of all the things and people that he loved, the most important was his cherished daughter Ellie -- and to her we say, thank you for sharing him with us. The world is immeasurably poorer for our loss of him.”
“It is with deep sadness that we let our readers know our beloved Rick Cohen passed away [today, November 17]. His loss will be inestimable to many of you, as it is to us. Rick will be remembered for his integrity, his powerful and nimble intellect, his unyielding courage in pursuit of truth, his commitment to social justice, and his humor. Of all the things and people that he loved, the most important was his cherished daughter Ellie -- and to her we say, thank you for sharing him with us. The world is immeasurably poorer for our loss of him.”
We could not agree
more.
“Clearly, the
operation and function of modern nonprofit hospitals do not meet the current
criteria for property tax exemption,” said New Jersey Tax Court judge Vito Bianco.
“Exempting nonprofits from tax is
grounded in the belief that they provide some service to society that, in their
absence, would have to be provided by the government. But for most nonprofits,
that is not true,” (in Forbes)
“The stories of
local parent volunteers quietly siphoning cash collected from various school
fundraisers has become a multimillion dollar epidemic…hundreds of schools are
losing money every year and that many of those cases are never reported.” (source)
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).”
Priest: “I was selfish…I stole $573,000 that did not belong to
me”
A priest who
pleaded guilty to mail fraud in connection with stealing $573,000 from St.
Thomas More Parish in Troy (MI) was sentenced to 27 months in prison.
The government
said Rev Ed Belczak “took what he pleased” from the parish to buy a Florida
condominium and invest in stocks. According to federal prosecutors, he created
false annual financial reports that were mailed to the Archdiocese of Detroit
that concealed his theft.
Belczak pleaded
guilty in September to mail fraud in the embezzlement scheme.
It was an
orchestrated scheme perpetrated over time to defraud the people he claimed to
serve.
Now that the court
case has ended, the archdiocese will resume proceedings under canon (church)
law against Belczak.
In a related case,
Janice Verschuren, the former office manager at St. Thomas More, pleaded guilty
last month to stealing more than $25,000 from the parish, according to the
Archdiocese of Detroit. She will be sentenced next year.
Fundraisers Take It All; Celebrities Assist: No Oversight
California youth nonprofit that has raised some
$6.9 million since 2011 with the help of celebrities and major-league sports
teams has paid 83 percent of the money to professional fundraisers, the Los Angeles
Post-Examiner writes.
California Police Youth Charities paid $5.7 million to two for-profit
solicitation firms while earmarking less than 1 percent of its revenue for
programs supporting at-risk youths, according to tax filings.
Since 2011, the nonprofit, based in
Roseville, CA, has raised more than $6.86 million in charitable contributions,
but about 89 cents of every dollar has gone toward salaries and professional
fundraisers — with more than $5.7 million in payments to the same fundraising
companies named in a 2009 lawsuit filed by California Justice Department
officials, according to records.
To build its good name, California
Police Youth Charities advertises its past and present affiliations with the
NFL’s San Diego Chargers and Oakland Raiders, the NBA’s Sacramento Kings and
the MLB’s Oakland Athletics. Its board of celebrity advisers includes former
Playboy Playmate of the Year Brande Roderick, whose 2009 appearance on
Celebrity Apprentice netted the group $168,000; singer Eddie Money; NBA Hall of
Famer Rick Barry; surfer Jeff Clark; and retired NFL players Christian “the
Nigerian Nightmare” Okoye, Rod Martin and Steve Wisniewski.
California Police Youth Charities didn’t just survive the state’s
investigations – it claims to be in a stronger financial position because of it.
“We benefited from the lawsuit in the amount of $200,000,” said the
organization’s executive director. “We admitted to no wrongdoing and must
continue to maintain our innocence to this day.” The nonprofit received
$200,000 as restitution from the for-profit fundraisers, according to the
settlement. A $700,000 fine in damages and restitution levied against
California Police Youth Charities was stayed as long as they complied with the
settlement.
Despite Attorney General’s tough
talk, California Police Youth Charities’ problematic fundraising practices have
continued. Since 2011, with the Attorney General’s office watching, less than 1
percent of the organization’s funds have been distributed in the form of
charitable grants.
A solution needs to come from both
sides: increased government oversight of charities and more vigilance by
individual donors, Loyola Law ethics professor Jessica Levinson said.
To make matters worse, beginning on Jan. 1, 2016,
professional sports entities, including NFL, NBA, MLB and NHL franchises, will
be allowed to run 50/50 raffles to benefit charities of their choosing. The
bill was strongly opposed by the California Association of Nonprofits, a statewide
advocacy group that represents more than 10,000 nonprofit organizations. “The
bill doesn’t include any provisions to assure raffle patrons’ funds would go to
legitimate charities that are in good standing,” said Jennifer Fearing, a
spokeswoman for CalNonprofits. (Chronicle of Philanthropy)
Breaking the Silence:
Adam Shryock was
ordered to spend six months in jail for violating a July 2013 court order
prohibiting him from engaging in or selling merchandize for any charitable
cause and claiming the funds are going toward charitable causes. Meanwhile…
he is accused of running a $1 million
theft at the Ecumenical Refugee and Immigration Services Inc. in
Denver. He was the founder
of Boobies Rock!, a fake charity fundraising group at the center of a 2013 lawsuit by the Colorado Attorney General's office. In
that case, Shryock is accused of collecting and keeping donations made to the
fake charity. Shryock was ordered to spend six months in jail for violating a July 2013 court order
prohibiting him from engaging in or selling merchandize for any charitable
cause and claiming the funds are going toward charitable causes.
Charity Check Up:
Unfounded Trust Leads To Hundreds Of Thousands
Of Lost Charitable Dollars
The
unpaid president of three different nonprofit foundations
purportedly embezzled from
foundation accounts used to fund church programs providing housing assistance,
re-entry services, child care and job training.
At the time of his
arrest in April 2014, he had been AC Transit's chief financial officer for six
years, collecting a $225,000 annual salary. He is not suspected of any
financial misdoing at AC Transit, which conducts thrice-yearly audits.
Lewis Clinton was a
well-respected member of the finance world and the spiritual community before
board members became suspicious that there might be financial impropriety when
it was unable to make payroll and excessive ATM withdrawals and debit purchases
were discovered, according to preliminary hearing testimony. He is accused of
embezzling $527,000 in checks and cashiers checks from one foundation's credit
union account, and another $60,000 to $70,000 in ATM withdrawals and debit card
purchases from a Wells Fargo account
Clinton used the
stolen funds on a country club membership, private school tuition, luxury cars
and vacations, according to testimony. Also without authority, he started
paying himself a salary. (source)
A Thought or Two:
Running (Race) Charities Give 1% To Research
A Minnesota-based non-profit organization that claims
it is "Helping Research One Race at a Time" actually donates only
about a penny-and-a-half for every dollar it raises for medical research,
according to financial records obtained by Kare 11.
Team Ortho Foundation sponsors some of the most popular running events in the
Twin Cities. Their races include the just-completed "Monster Dash" on
Halloween, the "Polar Dash" in January, the "Get Lucky"
race in March, and "Women Rock" in August. Team Ortho also sponsors
similar races in Chicago and Dallas-Ft. Worth.
The most recent
report shows that in 2013 Team Ortho brought in $4,362,877. Of that, what went
to charities like Shriners Hospital was just $72,700. A year earlier, it was a similar
story. Of $3,599,851 raised, just $36,550 trickled down to charity.
Do the math. The average amount going to charity is just a penny and a
half out of every dollar raised.
Some trips to China
to bring back customized Team Ortho outfits sound more like all expense paid
vacations. The executive director personally took as many as a dozen trips a
year overseas in recent years. Some of them are documented with personal photos
on his Facebook page.
Enjoy reviewing how much of your money is
actually going to medical research, check out
Team Ortho's financial reports.
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News
Nonprofit
News…
In
Case You Missed It:
1
Florida lawmakers are
calling for changes in administration of the state government's workplace
charity fundraiser following reports that the for-profit company running the
drive received more than half of the money collected last year, but could get
roughly two-thirds of the donations for this year's drive, according to Tallahassee-Democrat
2
Better than 31 percent
of respondents globally said they had made a charitable donation in the
previous month, up more than three percentage points from 2013. In the United
States, meanwhile, the proportion of people reporting a donation dropped to 63
percent, from 68 percent. Despite its 12th place rank in giving, the
United States retained the index’s designation as the most generous country in
the developed world, with relatively high marks in helping strangers (third
place) and volunteerism (sixth place).
3
A former Virginia
Girl Scout troop leader who is the primary caretaker of her three young
children with health issues will spend 12 months in jail for embezzling more
than $13,000 from several Parksley church-affiliated
Scout troops
4 When the Noah’s Ark Children’s Care (GA)
home opened its doors in the early 1990s, it did so as a residential group home
with the mission of providing a “a nurturing environment” for
“state-confiscated children,” according to IRS filings. A Channel 2 Action News investigation found evidence the group
home closed in 2010, but continued to solicit donations from the public,
accepting at least $658,000 in contributions from donors in the years that
followed. As recently as February
2015, that website was still soliciting and accepting donations as the
Children’s Care Home. The founder paid herself roughly $100,000 in children’s
care home salary during that time. Georgia’s Secretary of State’s charities
division opened an investigation after Channel 2 inquired about the Noah’s Ark
records.
5 After four and a half years in which the Central
Asia Institute was engulfed in scandal over claims that he fabricated parts of
his best-selling memoir, Three
Cups of Tea, and mismanaged the charity, which he started in the wake of
the book's success, author Greg Mortenson will leave the
school-building charity in January, the Associated
Press reports. Mr. Mortenson was accused of using the
institute and its resources to promote himself and his books. He was ordered to repay the
charity $1 million in
2012 as part of an agreement to settle an investigation by Montana's attorney
general. Mr. Mortenson also gave up
management of
the nonprofit as part of the pact, but he remained a full-time member of its
staff.
6 Canada: A long-time March of Dimes employee has
been charged with allegedly defrauding the charity of $800,000.
7 Singapore: Mega church Pastor jailed for
eight years for $35 million fraud.
8 Car donation organizations give a much smaller portion of the
donations they receive to charity than similar sorts of fundraising campaigns,
spending nearly two-thirds on salaries for their own employees and other
administrative costs, according to a report released by the attorney
general's office. One, People’s Choice
Charities, claimed that all the proceeds from the sale of donated cars would
support the donors’ choice of charity. In reality, however, 97% of the
donations was spent on administrative costs and advertising, leaving only 3%
for the charities. the attorney general's
office filed civil lawsuits
asking judges to shut down two Southern California-based charities for
misappropriating millions of dollars from donated cars.
We flagged these few
examples of charity misdeeds:
1.
Birmingham
Health Care and Central Alabama Comprehensive Health (AL) $14 million
2.
Westland Hockey
Association (MI) <$50,000
3.
Camp Fish Tales (MI)
<$100,000
4. Newaygo Area District Library (MI)
unknown
5. Fox Valley CAP Council (WI) $30,000
6.
American Federation of
Government Employees Local 477 (KS) $65,000
7.
Cancer Support Community Arizona
$240,000
8.
Winsted (CN)
condominium association $50,000+
9.
Radford University (VA)
$17000
10. Swink
School District (OK) $235,000
11. Mancelona Food Pantry (MI) $5000
12. Montana School Counselor Association $55,000
13. American Postal Workers Union Local 286 (IN)
$60,000
14. State Employees Association of North Carolina $500,000
15. International Brotherhood of Electrical Workers Local 1637 (PA) $22,000
16. Kearsley Baseball Boosters (MI) $17,000
17. St. Albert the Great Catholic Parish (OH) $50,000
18. Lions Eye Bank of West Central Ohio $338,000
19. Preble County Historical Society (OH) unknown
20. American Federation of Government
Employees, Local 2207, AFL-CIO (AL) $92,000
21. United Association of Plumbers and Pipefitters Local 83 $5000
22. Salvation Army (GA) $5000+
23. Scottsville Baptist Church (KY) $512,000
24. International Brotherhood of Electrical Workers Local 164/ Joint Apprentice Training Fund (JATF) (NJ) $350,000
25. Novato Police Officers Association (CA) $250,000
26. American Federation of Government Employees Local 1119 (NY) $30,000+
27. Yosemite National Park Child Care Center and the Yosemite Child Care
Center $42,000
28. CNP
Youth Athletics organization (OK) $10,000
29. Downtown Pasco (WA) Development Authority $90,000
30. Stoughton Viking Wrestling Club (WI) $86,000.
31. United Transportation Union Local 493 (IA) $13,000
32. International Association of Bridge, Structural, Ornamental and
Reinforcing Iron Workers Local 372 (OH) $68,000
33. Tri-County Fairgrounds (CA) $9000
Political/public official chicanery (just a few):
1 Tyrone Brooks, a former Georgia lawmaker and civil
rights activist, pleaded guilty to one count of filing a false tax document and
no contest to five counts of mail and wire fraud. The indictment alleged Brooks solicited about $1
million in contributions from the mid-1990s to 2012 from individuals and
corporate donors and used much of it for personal expenses. The contributions
were made to the Georgia Association of Black Elected Officials, which Brooks
had led since 1994, and to Universal Humanities, a tax-exempt organization he
founded in 1990.
2
A deputy city clerk in Oak Park, MI, is accused of embezzling more than $433,000
3
The former director and
administrative assistant of the Itawamba County (MS) Development Council face embezzlement charges.
4
Carbon County's (UT)
former emergency management director has been indicted by a grand jury for
allegedly embezzling thousands of dollars in federal grant money.
5
A long-time Archer
County Justice of the Peace pleads guilty to embezzling around $40,000 from
fines and fees since 2008.
6
The Mapleton (UT)
Irrigation District's former financial manager who pleaded guilty to embezzling
more than $100,000 funds from the organization has been sentenced to probation.
7
An ex-Columbus (OH) cop
pleaded guilty of embezzling nearly $90,000 from the Department of Veterans
Affairs.
8
Coalport, Clearfield
County, Pa. council secretary was convicted of stealing $23,000 from 2007 to
2013
9
A former treasurer of the Novato
Police Officers Association (CA) has been charged with felony embezzlement
10
A long time and well
respected Grand County (CO) commissioner was forced to resign from his position
and under a plea deal with prosecutors for allegations of misuse of funds
11
A town clerk for Oil City (LA) has been charged with stealing over $24,000
12
The Town of Terry's
(MS) mayor entered a guilty plea to five counts of embezzlement. Roderick
Nicholson faces100 years in prison for using town funds for personal use.
13
A senior accountant at
the Illinois Medical District Commission pleaded guilty to embezzling more
than $130,000 from the state.
14
An investigative report
from the Eau Claire (WI) Police Department showed almost $1.39 million of Eau
Claire County funds went missing from the treasurer's office since 2001
15
Former
Gene Autry (TX) mayor appeared in court for the first time on Tuesday on an
embezzlement charge. District Attorney Craig Ladd says she embezzled more
than $132,000.
16
A District Court
clerk and a man were charged with forgery after they allegedly took about
$20,000 in bribes to dismiss more than $40,000 in Detroit traffic tickets and
fines.
17
La Plata County (CO)
Sheriff’s Office investigator pleaded guilty this summer to embezzling more
than $16,000 from a charity formed in honor of his 5-year-old daughter, who
died in 2012 after ingesting a lethal dose of cough medication.
18
A Tampa (FL) fire
captain has agreed to plead guilty to federal charges for embezzling more than
$187,000 from Hope Children's Home, a children's charity that was founded by
his father.
19
A former California
Highway Patrol officer was convicted of embezzlement when he served as the
treasurer of the highway patrolman’s club, the Bakersfield 420 Club.
20
Former Toombs County
(GA) Tax Commissioner Julie Newsome was arrested for an alleged embezzlement
from the Toombs County Tax Commissioner’s Office. It is alleged that Newsome
stole over $91,000 in county funds during 2011 and 2012 while she was serving
as the Tax Commissioner of Toombs County.
21
Former New Mexico
Secretary of State Dianna Duran pleaded guilty to two
felony embezzlement ($14,000) charges and four misdemeanors
22
A former Pittsville
(MD) town employee accused of embezzling, has been found guilty on all five
counts of felonious theft of $170,00
23
A Capistrano Beach
(CA) man pleaded guilty today to overbilling the county about $130,000 and
embezzling about $440,000 from a company that managed part of the Dana Point
harbor and was immediately sentenced to a year in jail.
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 media sources...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. These incidents include
only a fraction of the estimated $40 billion of charity crimes. 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,
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)
…”This book should be read by
everyone. It will send a shiver down the reader's spine to think that people
with little money to spare have given generously…”
- 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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