Wednesday, March 23, 2016

Nonprofit Imperative Mid March E-newsletter



Nonprofit Imperative
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March 2016
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:
Wounded Warrior Project
Charity Check Up:
Trump Donations
A Thought or Two:
Rockland County ‘internal connections’
Nonprofit News-In Case You Missed It:
Colorado Fraud Penalties; Greek Orthodox Church Priest…more
Political/Official Chicanery:
NY; OR; FL; MI…more
What Do You Think?
·       To do good, donors must do their homework
·       Give without being taken

An interesting student perspective on the American Red Cross: here @ thedickinsonian

"Our legal systems and protections have not caught up with the realities of the digital world," Puneet Manchanda, a professor of marketing at the University of Michigan's Ross School of Business said. "The scammers will always be ahead. The solution is regulation and education."

Good Read: NFL: Poor Cancer Charity Choice (broadly)

Skunk of the Month…
        “They came to do good and they did very well indeed (for themselves).”

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:

When Will The Vet Charity Malfeasance End? The Biggest Case…
Wounded Warrior Project is the largest veteran’s charity in the country. Since 2009, the group raised nearly $1 billion.

It is the latest veterans’ charity to get caught having questionable practices with disregard for donor’s interests.

WWP joins many similar veterans’ organizations that are notoriously poor in their management practices. Nonprofit Imperative has highlighted similar instances that have taken place in the past. (see a few: hereherehere). NI has probably uncovered approaching 100 similar questionable veteran organizations. (It is a tight race between vet charities and cancer charities, particularly breast cancer, for the worst charities)

The Wounded Warrior Project spending on conferences and staff meetings was at $26 million in 2014, a startling increase from less than $2 million in 2010. 

When Fred and Dianne Kane, major donors heard about it, they have dedicated themselves to a new cause: demanding reform at the organization. They are demanding that the CEO, Steve Nardizzi, be fired. (According to (CBSNews), he is not the only large donor to do so.) But since sources close to the organization say the board signs off on all major spending decisions and also stays at five-star hotels on the organization’s dime. They are too culpable.

“I don’t understand how an organization that has many veterans who value honor and service and chain of command can be led by a guy like that.” “I feel like I am representing all these people who have donated over the years, all these seniors over 65 sending $19 a month, all these people on fixed incomes,” said Fred Kane, one of its major fund-raisers who has raised more that $325,000. “If no one is going to talk about this right now and it has to be me, then it has to be me.” (nonprofit quarterly)

In view of the adverse publicity and a major downturn in contributions, the board hired an external legal counsel and consulting firm as forensic accounting consultants to conduct an independent and objective review of the allegations reported in the media. This work has involved the review of financial and other records, as well as interviews with former and existing employees at all levels of the organization including members of senior management and the Board of Directors. Reportedly, the preliminary results of both a financial and policy audit are now in, and the board yesterday fired not only CEO Steve Nardizzi, but also COO Al Giordano.

The board chair suggested that the issues described in the media were incorrect, but the board nevertheless found the need to terminate the two. Look for a significant settlement or lawsuit which will be paid for, most likely, by contributions.

The Daily Beast states the charity had a quarter-million-dollar annual budget for candy and soda, and spent untold sums on staff field trips and elaborately produced music videos promoting executives.

A whistleblower said: “The problems at WWP start at the top but this is a systemic problem that permeates through the culture of the organization. Ultimately, the selfish attitudes, egomaniacal actions, and self-interest led to donors being lied to and veterans being used for personal gain.”

Mr. Nardizzi, who earned nearly $500,000 annually, according to the group’s most recent available tax filings, is a longtime critic of charity ratings used by watchdog groups like Charity Navigator and CharityWatch and serves on the steering committee of the advisory board of the Charity Defense Council, which works to defend nonprofits from accusations of wasteful spending.

The Wounded Warrior Project stated that "80 percent of total expenditures (in 2013) went to provide services and programs to wounded service members and their families, but Charity Navigator calculates that the organization actually spent only 57.7 percent in 2013. CharityWatch pegs the amount at 54 percent.

Very recently, nonprofit watchdog Charity Navigator added the Wounded Warrior Project to its "CN Watchlist", citing news reports this week that detailed allegations of wasteful spending, mismanagement, and mistreatment of employees.

The group’s founder, a wounded Marine named John Melia, announced that he was interested in returning to the organization, which he left in 2009 after a dispute with Mr. Nardizzi and Mr. Giordano.

Employees say Mr. Nardizzi vanished from view, refusing to talk to the news media, stopping his weekly addresses to the staff, and even disappearing from the halls of the group’s offices. One employee who did not want to speak publicly because she feared being fired said “There was no one there to tell us what was going on or how we were going to get through this.”

Where was the board? Did the audit confirm reports that the board was enjoying the good life, also.

                                                  --------------------------------

Just in: The U.S Attorney’s Office says a married couple in California started the Wounded Marine Careers Foundation with the apparent intention to provide job training, benefits and equipment for injured Marines returning from Iraq and Afghanistan. They were sentenced for embezzling federal funds from a film school for wounded veterans they founded, a total of $400,000.

Just in: In Texas, a group of men claimed that their organization, United Soldiers Outreach, LLC, would use these donations to send care packages to American soldiers stationed abroad. It was a fake organization.
Charity Check Up:
Another Vet Org. Gets Caught
After two months, veterans organizations have received $2.94 million of the $6 million presidential candidate Donald Trump said he raised for former service members at an Iowa rally in January, according to CNN and The Washington Post. The Trump campaign released details of the donations after the Post had contacted the 24 charities Mr. Trump identified as beneficiaries and accounted for less than half of the money.
The bulk of the $6 million was raised from wealthy associates of Mr. Trump's, some of whom gave directly to veterans groups in response to his appeal. The Donald J. Trump Foundation, to which about $1.7 million in public donations were routed, has doled out about $1.1 million.
A Thought or Two:
Feds Raid On Tech Vender Probe
Three hundred FBI agents with search warrants in hand entered multiple yeshivas and vendors’ offices in Rockland County, demanding they account for technology purchases for which they billed the federal government. A 2013 investigative report found that haredi Orthodox yeshivas, particularly Hasidic ones, in Rockland County and Brooklyn disproportionately benefit from the program even though few offer their students or teachers Internet access. Orthodox schools that publicly eschew the Internet were awarded millions of dollars for tech equipment and Internet wiring.
One school had been cited for noncompliance, yet continued to be approved for millions of dollars of services through E-rate. In 2011, it was approved for more E-rate funds than any other Jewish school in New York State, and in 2013 it applied for, but never received, $1.2 million for “internal connections” and “internal connections maintenance” provided by a nearby company. One of the Rockland County vendors raided was according to the Jewish Week’s 2013 reporting, one of the largest E-rate service providers in the Jewish community. In 2011 it was awarded more than $3 million in E-rate contracts, largely for Jewish clients, and did more business in the Jewish sector than Verizon, Sprint and Nextel combined.
Two General Accounting Office reports have noted problems with the nonprofit’s “internal controls,” and several multi-million-dollar fraud cases involving the company have been exposed. (source)

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Nonprofit News…
In Case You Missed It:
1.       State taking over Federal responsibility: A bill at the Colorado capitol would toughen the punishment for fraud involving charities. the proposal, which just passed out of committee at the state capitol, a person found guilty of charitable fraud would face a civil penalty of up to $10,000 for each violation, with no cap. Right now it’s $2,000 per incident with a $500,000 cap. The measure is needed because the federal government isn’t enforcing its charitable fraud laws.
2.       A Greek Orthodox priest pleaded guilty to embezzling more than $100,000 from his former parish in Wauwatosa (WI) He used it for lavish dinners, jewelry for his wife and everyday expenses. He had been the pastor at the church about 20 years.
3.       Oasis Foundation executive director has been sentenced to 21 months in prison on a federal charge stemming from the embezzlement of over $1 million from the private charitable foundation in Washington DC
4.     The Downtown Pasco (WA) Development Authority (DPDA) will be starting fresh in 2016 with bold new plans to further improve the community after an embezzlement case left them more than $100,000 in debt. A fraud rocked the nonprofit when former DPDA Director Michael Goins was charged with embezzlement of more than $90,000 in December 2015. The ongoing case has left the group facing more than $70,000 in IRS taxes along with debt to at least 40 companies.
5.     New York City Mayor Bill de Blasio said he has begun shutting down the nonprofit group that was advancing his political agenda, a move that comes just weeks after a government watchdog called for a probe into its actions. His group, dubbed the Campaign for One New York, was not bound by city campaign finance laws and could accept unlimited contributions from donors. It used that money to promote some of de Blasio's signature policy initiatives, including universal pre-K and a rezoning plan that would aid in his effort to build more affordable housing.
We flagged these few examples of charity misdeeds:
1.     Madison (IN) Gymnastics and Cheer Corporation thousands
2.     Eastern Carolina EMS $4500
3.     Gloria’s Poker Palace and Pocket Aces (MI) $17,000
4.     Reaching Up and Reaching Out (PA) $11,398
5.     Care Charities (NJ) $25,000 
Political/public official chicanery (just a few):
1.Top officials at the Northern Manhattan Perinatal Partnership (NMPP) gave themselves hundreds of thousand dollars in “bonuses” at the same time they were failing to deliver on a $4.3 million contract to carry out one of Mayor Bill de Blasio’s signature initiatives to bring community health care to city housing projects, a DNAinfo New York investigation has found. The city’s Department of Health yanked its three-year contract last November after just one year — but that did not stop its executive director and his top aides from taking bonuses that virtually doubled their salaries. The long-time NMPP chief raked in at least $71,300 in additional “bonus” pay. The NMPP’s chief financial officer jumped even more than the exec between December 2014 and last July — collecting at least $87,000. The nonprofit’s Human Resources administrator also took in at least $23,900 in “bonus” payments, and her niece, who served as the exec’s secretary, received $20,000, the financial records show.
In all, the quartet divvied up roughly $200,000 between December 2014 and last July, according to the documents.
Records show that city Department of Health and Mental Hygiene funds earmarked for an “infant mortality reduction initiative” were used to pay bonuses to the exec and his CFO.
The contracts with the city specifically state that the city has to be notified if a vendor is even considering paying a bonus and explain why. This was not done.
“On the Inside” initially reported on Drummonds and the NMPP in April 2014,revealing that Drummonds tried to cover up his hiring of career criminal Daniel Rodriguez — without conducting a background check — as a case manager. Rodriguez preyed upon the women he was hired to help, fathering a child with one and nearly costing another her children to foster care, as DNAinfo previously reported.
When the women came forward about Rodriguez, Drummonds told them to keep quiet and let Rodriguez go without alerting authorities. That decision helped Rodriguez move on to victimize other women here and in at least three other states — Connecticut, Massachusetts and Maryland.
Rodriguez's present whereabouts are unknown.
DNAinfo New York disclosed last November that the city axed its $4.35 million contract with the NMPP, and that it was transferred to another nonprofit, the Fund for Public Health. (source)
2.     The deputy treasurer for Augusta Township has pleaded guilty admitting he stole property tax.
3.     A former Deschutes County sheriff’s captain has pleaded not guilty in U.S. District Court in Eugene (OR) to charges related to the alleged theft and embezzle­ment of more than $200,000 in taxpayer funds.
4.     The owners of Racetrack Bingo (FL) in Fort Walton Beach have been charged by federal authorities with conspiracy to commit fraud, illegal gambling and the theft of millions of dollars from local charities. An indictment summarizes charges against Larry and Dixie Masino. The indictment states the Masinos conspired to obtain approximately $5.8 million in “criminally derived property” by defrauding a coalition of charities through exorbitant rent and fees for the use of their bingo hall.
5.     The head of a purported charity with close ties to Florida U.S. Rep. Corrine Brown pleaded guilty in a federal fraud investigation. One Door for Education Foundation Inc. (VA) President Carla Wiley pleaded guilty to one count of conspiracy to commit wire fraud and agreed to testify in the larger ongoing case. Potential donors attending a golf tournament received letters from One Door with Brown's signature and official House seal asking them to give from $125 up to $20,000 to One Door. Authorities say no charities received any of the money raised. Wiley transferred herself tens of thousands of dollars, including $16,000 for making payments on two vehicles registered in her name. The money was also used to fund lavish parties, an NFL luxury box and other extravagances in Washington, according to the plea agreement.
6.     Cary Lee Peterson — the creator of a purportedly pro-Bernie Sanders super PAC that collected nearly $50,000 from “James Bond” actor Daniel Craig — was arrested Sunday in San Francisco by the FBI and charged with securities fraud, Department of Justice officials announced. Peterson “defrauded investors by issuing false filings and press releases touting its purportedly lucrative — but wholly fictitious — business deals,” according to one of the government’s complaints against him.
7.   Three years after a judge showed him mercy in a corruption case, ex-Pontiac school official Jumanne Sledge appeared before that same judge, begging for a second chance. He had violated the terms of his probation and feared going to prison, so much that he was shaking in court all afternoon, his lawyer noted. Too bad, countered the prosecutor, who shot back: "He wasn't shaking when he took the half a million dollars from ailing schools. ... I think incarceration is in order."
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, 2016  










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