Wednesday, December 9, 2015

Late November Nonprofit Imperative E-Newsletter



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.” 
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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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
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Email: gary.r.snyder@gmail.com; 248/324-3700;
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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