Nonprofit
Imperative
…your nonprofit browser
April 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:
Priest Takes $400,000;
Healing Arts Institute Lost $750,000
Breaking
the Silence:
Wounded Warrior
Project…more Vet Info.
Charity Check Up:
$75 million
Cancer Charity Malfeasance
A Thought or Two:
Nonprofit
Diversified Behavioral Comprehensive
Care Lost $8 million
Nonprofit News-In Case You Missed It:
IRS; $4 Million Megachurch;
Steven Cohen Commits $75 Million To Vets…more
Political/Official Chicanery:
SD; NY; IN; MI; FL; VT…more
What Do You
Think?
·
To do good, donors must do their homework
· Give without being taken
"Board members of the city’s nonprofits must take
more responsibility and become better stewards of their organizations, says a
new report released Tuesday, the second self-examination of the sector to come
out in the past month, a recently released report from
the Human Services Council said.”
·
Fraud is on the rise at nonprofit organizations,
and it’s increasing frequency and cost;
·
Nonprofit organizations account for 11% of all
occupational fraud recorded (nonprofits represent only 5.4% of GNP)
·
Nonprofit organizations suffered the largest median
losses in the study
·
Most fraudsters (90%) have never been punished or
terminated by an employer for fraud-related conduct
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:
Priest Gambled Away About $400,000 Meant For Refugees
According to reports in the
Canadian media, an Ontario-based
Catholic priest is under investigation on suspicion of gambling
away funds that had been set aside to provide for refugees newly settled
in Canada.
Father Amer Saka, a priest at the St. Joseph
Chaldean Catholic Church in London, Ontario, is suspected to have
lost roughly half a million Canadian dollars (equivalent to $380,000
U.S.) that had been entrusted to him by local families keen on
sponsoring new arrivals from the Middle East.
He lost all the
money by ‘Gambling,’" church's bishop, Emanuel Shaleta, told the
Toronto Star. Seven to eight families had given their donations to Saka.
"They trusted him. They did not give it as a gift. They were trusting the
priest. They didn't ask for receipts," he said.
Canada's government-led
program to give sanctuary to tens of thousands of Syrian and Iraqi refugees
involves the combined efforts of the state as well as private donations to
sponsor refugee arrivals. Saka was in charge of funds raised by the Hamilton
Diocese to sponsor 20 Iraqi refugees.
$750,000 Theft Ends Up With Worse Charges
This
is scary: After leaving her office for the day, a man holding a cup
approached her, the authorities said. The cup was filled with a chemical drain
cleaner, and he flung the liquid at her, severely burning her face. The
executive of Healing Arts Initiative was targeted to cover up a scheme led by a
former bookkeeper for the organization to embezzle more than $750,000,
according to a 65-count indictment. The bookkeeper, Kim Williams, created
dozens of bank accounts under fake names, where she deposited more than $600,000
for herself and another $150,000 for a friend, who was also arrested. The
executive noticed money was missing and called a meeting to discuss it; days
thereafter the accountant hired an outsider to perform the act. The recently
hired executive was hospitalized with severe burns and required multiple
surgeries. She has not returned to work, officials said. (nytimes)
Breaking the Silence:
More On Wounded
Warrior Firings
Steven Nardizzi and
Al Giordano were fired from Wounded Warrior Project for extravagant
spending practices.
They are not going
away quietly.
The reports
highlighted expensive conferences, travel, and other lavish spending by the
nonprofit. The Times investigation
also featured interviews with employees who said they were fired for minor
offenses or disloyalty.
Together they started a blog, the Wounded Truth,
devoted to attacking media investigations into Wounded Warrior Project.
Its first post
appears to be from March 17 and highlights a criticism of the media
investigations carried out by the Charity
Defense Council. Mr. Nardizzi
serves on the steering committee of the defense council’s advisory board, and
the council received a $150,000 grant from the veterans charity, according to
Wounded Warrior’s 2013 Form 990.
They were featured
in television interviews defending themselves and Wounded Warrior with a local
Fox TV station in New York and with Brian Kilmeade, co-host of Fox &
Friends. They also penned an op-ed for The Washington Examiner this week attacking the media
reports and defending their former organization. (Chronicle of Philanthropy)
An Army
veteran has been named to the position of interim chief operating officer
of the Wounded Warrior Project after a major shakeup at the nation's largest
veterans charity in the wake of investigations including a culture of fear at
the Jacksonville-based nonprofit.
More
Vet theft: A woman has been indicted on charges of defrauding an
organization that works with veterans. Investigators say she was given
thousands of dollars for a benefit that was never held. They say she stole the
identity of the founder of "Veterans Hope Charity" and opened a
credit card account, charging $25,000.
Even
More On Vet Charities: More than two months after Donald
Trump skipped a Republican debate to hold a fundraiser for veterans, the
targeted beneficiaries are still seeing most of the promised money. Nineteen of the 22 veterans’ charities to which Trump
promised to donate the proceeds, and found that only about $2.4 million of the
$6 million raised has been distributed. (wsj)
More On Trump: A list of Donald Trump’s donations over the past five
years, compiled in a list by his campaign, did not include a single
contribution of his own money, a Washington
Post analysis reported. Trump has claimed he’s given more than $102
million to charity in the last five years. But the Post found of the 4,844 donations
listed in the campaign’s report, most of the contributions consisted of free
rounds of golf at his courses for charity auctions and raffles. The newspaper
also reported the largest donations on the list were land-conservation
agreements to waive development rights on some of his properties.
Charity Check Up:
The Sugarcoating Of Cancer Charity Fraud
He took $75 million from donors and
the punishment he got was that he can no longer do the same because they took
away his keys to the vault. The two bogus charities-Cancer Support Services and
Cancer Fund of America-he set up were closed and he is barred from making money through charity fund-raising or
working in the not-for-profit world. (Freep)
The reality is that he remains a
very wealthy man. The amount he took according to the “FTC and our state
enforcement partners… have ended a pernicious charity fraud that siphoned
hundreds of millions of dollars away from well-meaning consumers,
legitimate charities, and people with cancer who needed the services the
defendants.“ It seems like he got away with much more than reported.
“Today’s agreement helps ensure that
the charitable donations of Michigan residents are used as intended by their
donors and for the good of society,” according to Michigan Attorney
General Bill Schuette.
This is nonsense. Both of these are
public pronouncements are attempts to cover the magnitude of the problem.
The fraud we uncovered from public
records taken from charities and taxpayers is enormous and it is a sliver of the actual amount. Studies suggest that charity fraud amounts in
excess of $40 billion.
----------------------------------
On the day of the press conference
on the two bogus charities, public documents reveal that…
1. Another charitable foundation was defrauded out of $75 million;
2.Twelve Detroit principals, an
administrator and a vendor were charged in a $1-2.7 million kickback
scheme;
3. A youth baseball league charity
was ripped off for $22,000;
4. Millions of dollars were taken
from an animal cruelty charity;
5. A Kentucky church was hit for
$274,000;
6. A township Supervisor is accused of embezzling from the Fraternal Order
of the Eagles;
7. A treasurer of a youth football league is accused of taking $204,000.
This magnitude of charity fraud is a daily occurrence.
The likelihood of restitution is
minimal. Restitution is seldom
discharged. In some instances, legal authorities
do not even seek it.
A Thought or Two:
Nonprofit Caught In Huge Fraud
Nonprofit Diversified Behavioral
Comprehensive Care, which billed itself as a group that provided social
services and mental health care to children and their families, was charged
with illegally spending more than $8 million in taxpayer money. The owner
admitted at a federal
hearing to submitting two nearly identical grants — one for $450,000 and
another for $342,000 — to fund his personal and business, according to a
Department of Justice release. Previously, State
investigators alleged in their joint 2011 report that the owner mismanaged or
misused portions of the $18 million in state grants he received.
He remains free
on bond and is due back in court in July for sentencing.
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News
Nonprofit
News…
In
Case You Missed It:
1. Nearly seven out of 10 charities expect to raise
more money in the coming year, with 15 percent of groups projecting growth of
more than 15 percent, a survey has found.
2. A man has pleaded guilty in a $1 million charity
fraud case involving the sale of donated mattresses contributed to the
Ecumenical Refugee and Immigration Services Inc. in Denver, officials said.
3. A federal appeals court slammed the
Internal Revenue Service for what it called three years of “continuous
resistance” to turning over documents in connection with a class-action suit
brought by tea party groups singled out for months of delays, excessive
paperwork and scrutiny as they sought tax-exempt status in 2010. A unanimous
ruling by a three-judge panel of the Cincinnati-based U.S. Court of Appeals for
the 6th Circuit found that the IRS, in its unresponsiveness to the charges,
“has only compounded the conduct that gave rise” to them. The case was brought
by the NorCal Tea Party Patriots and other groups, in 2013.
4. A California accountant was sentenced to nearly
five years in prison for stealing more than $4 million from a megachurch and
the Western States Golf Association, a California group for which he served as
treasurer, from 2007 to 2014 to feed a growing gambling addiction.
5. Good
Vet News: Billionaire
hedge-fund investor Steven A. Cohen is committing $275 million to form a
national network of free mental health clinics for military veterans and their
families. The pledge is his biggest yet under a philanthropic push that grew
after his son, Robert, was deployed as a U.S. Marine to Afghanistan in 2010.
Cohen is seeking to open 25 clinics by 2020 serving a total of more than 25,000
patients a year, said Anthony Hassan, the retired Air Force officer who
runs the initiative as executive director of the Cohen Veterans Network.
We flagged these few
examples of charity misdeeds:
1.
Visit Philadelphia
$200,000
2.
Framingham United
Soccer Club (MA) $175,000
3.
The Fort Peck Fine Arts
Council (MT) $83,000
4.
Grand Valley State University (MI) <$100,000
5.
26.4.26 Foundation (TN)
$70,000
6.
Moore Charitable
Foundation $25 million
7.
26.4.26 Foundation
(Sandy Hook charity) $73,000
8.
The Cuban Chamber of Commerce (MI)
unknown
9.
Big Brothers Big
Sisters of the Tri-State (WV) $36,000
10. Detroit Metro Stars $22,000
11. Diablo Valley
(CA) Youth Football Conference $200,000
12. Peaceable Farms
(VA) million
13. Scottsville Baptist Church (KY) $274,000
14. Disabled American
Veterans (DAV) (TX) $31,000
15. Southwestern Michigan Community Ambulance Service
(MI) <$100,000
16. Fraternal Order of Police (NC) unknown
17. Saint Ignatius High School (CA) $180,000
18. Agape Family Worship Center (NJ) $4 million
19. Camarillo Fiesta Association (CA) $24,000
20. American Legion Post #28 (DL)
$641,000
21. Bernalillo Public Schools (NM) $68,000
22. Sons of Malta
(MI) thousands
23. Grass Valley Downtown Association (NV) >$1000
Political/public official chicanery (just a few):
1
A former nonprofit
executive and two local education agency staffers have been charged with
multiple conspiracy and theft felonies involving the embezzlement of more than
$1 million in federal grant funds intended to help Native American students
prepare for college. The Executive Director of the nonprofit American Indian
Institute for Innovation (AIII), a subgrantee in South Dakota’s GEAR UP program
and the executive director and interim business manager, respectively, of the
Mid-Central Educational Cooperative (MCEC), were also charged.
2
The executive director
of a Queens nonprofit organization that provides services for developmentally
disabled persons was charged Monday with embezzling Medicaid funds to hire
housekeepers to clean her home and care for her kids. Yolanda Vitulli allegedly
paid more than $60,000 in Tender Care Human Services funds to at least three
housekeepers.
3
The Trump Foundation
appeared to have illegally given $25,000 to a political group supporting
Florida Attorney General Pam Bondi while her office was reportedly considering
taking action against Trump University and told the IRS that the Foundation
hadn’t given any money to political groups. The Foundation told the IRS
that the money instead went to a Kansas anti-abortion group. Aides now
claim that Bondi asked the Trump Organization for money on behalf of the
political group, that the contribution was originally intended to come from Trump
personally, but that his staff thought the contribution was going to a
similarly named Utah charity, so his foundation cut a check to that charity,
then somehow sent it to the Florida political group anyway, and then on the
Foundation’s taxes listed the name and address of another similarly named
Kansas group as the recipients of the check.
4 A former office manager for the Bloomington Parks
Department will spend the next two years in federal prison. She was
convicted of diverting, embezzling and misappropriating over $430,000 in funds
from the Parks Department and the Bloomington Community Parks and Recreation
Foundation for her personal use. She used foundation credit cards to make
personal purchases and transferred funds to her personal bank and credit card
accounts.
5 Lapeer County (MI) Circuit Judge Byron Konschuh was charged
in 2014 with embezzling about $4,000 while serving as the county prosecutor. A
Genesee County Circuit Judge gave
Konschuh a 90-day delayed sentence after Konschuh pleaded no contest to a
misdemeanor of failing to account for county money. He’s expected to return to the bench.
6
A former Loudoun County
deputy was convicted of embezzling more than $229,000 from the county’s asset
forfeiture fund.
7
Grenville
(SD) financial officer is charged with embezzlement of nearly $72,000 from
the community.
8 The executive director of the Hope Children’s Home, a former Tampa Fire Captain, pleaded guilty to stealing more than $187,000
from orphans, and abused and neglected children.
9
A volunteer treasurer of the Hubbard Lake South
Shore Fire Department was arrested a former fire
department volunteer accused of embezzling up to $100,000.
10 The agency that maintains Utah’s 911
system stated one of their employees and a family member allegedly used agency
credit cards fraudulently to the tune of more than $1 million over the course
of several years. The Utah Communication Authority stated the employee in
question has been fired, a civil lawsuit has been filed, and police are
investigating the alleged case of embezzlement for criminal charges. Both
have agreed they owe the state $2,328,000 when you factor in the $1 million
alleged embezzlement, along with $578,000 in pre-judgment interest and $750,000
in punitive damages.
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, 2016
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