Nonprofit Imperative
…your nonprofit browser
September 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:
Hershey Trust; Wounded
Warriors…more
Breaking
the Silence:
Angel Fund
Charity Check Up:
USID; Birmingham
Health Care
A Thought or Two:
Principle For
Charities To Live By
Nonprofit News-In Case You Missed It:
Clinton Foundation,
Southlake Christian Academy; American Red Cross; …more
Political/Official Chicanery:
MI; TX; NC; CA; WI; KS…more
What Do You
Think?
·
To do good, donors must do their homework
· Give without being taken
This a good read from ProPublica about the problems
associated with truth getting in investigative reporting.
---------------------------------
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:
Hershey Trust Finally Reaches An Agreement
The board of the Hershey Trust announced that it has
reached an unofficial agreement with the Pennsylvania attorney general's office
that could head off a court battle over governance of the $12 billion charity
that controls the namesake chocolate company, Reuters reports.
Trustees Joseph Senser, Robert Cavanaugh, and James Nevels
will resign by the end of the year, according to Reuters, which cited unnamed
sources familiar with the details of the settlement. Chairwoman Velma Redmond
will step down before the end of 2017, along with trustee James Mead. The
deal would also set a 10-year term limit for board members, give the attorney
general 30 days to object to newly named trustees, and place restrictions on
board pay.
The trust, established candy magnate Milton Hershey to
operate a school for disadvantaged children, has voting control of Hershey Co.
It has been a lightning rod for controversy in recent years, with state
regulators investigating allegations of self-dealing and questionable financial moves and attempting to mandate changes in board
membership and wages. In February, the attorney general's office sent trustees
a letter threatening legal action if the
organization did not agree to reforms on pay and if certain board members did
not step down.
A Different Twist At Charity Fraud
A UK funeral director has admitted
failing to hand over thousands of dollars in donations given in the memory of
loved ones and faking letters from charities in order to cover up her crime.
Among the alleged victims said to have been deprived of donations are Weston
Hospice Care, Help for Heroes, Action for Children, Alzheimer's Society,
National Society for the Prevention of Cruelty to Children (NSPCC), Friends of
Axbridge, Children's Society, Royal National Lifeboat Institution (RNLI), St
Monica Trust and Brunelcare. (source)
Wounded Warrior Project Resetting
The new chief executive of the
Wounded Warrior Project, one of the nation’s largest veterans charities, said
he anticipates laying off an undisclosed number of employees and cutting the
amount of financing it provides smaller veterans groups amid a restructuring
that follows scrutiny of the nonprofit organization’s spending. Details of the
restructuring will be announced in September, but employees already know that
some jobs will be cut and the salaries of some senior officials will be
reduced, he said. There are currently about 600 employees, with headquarters in
Jacksonville and offices in other cities.
“We
have a long road ahead of us, and the mission is huge, and it’s going to
continue to grow,” Retired Army Lt. Gen. Michael Linnington said. “We have to be as
nimble and as transparent and as responsive as we can possibly be.”
Linnington also was hired at a salary
of $280,000, he said. That’s significantly smaller than the $473,015 and
$369,030 others received in 2013, the last year for which tax documents are
readily available. At least 12 employees made at least $147,000 at the time.
“I have a much different salary than
my predecessors had, and I think that’s appropriate,” Linnington said. “We’re
looking at all of the salaries of all of our executives now, and I think that
you will see them all trend down, as well. That’s part of trying to squeeze
every nickel out of every donor dollar and to get it where it’s most needed:
with those who served.”
Breaking the Silence:
A Catholic priest will spend three
to 20 years in prison for conspiracy to run a criminal enterprise in connection
with the theft of money from a charity that helps poor people. The Rev. Timothy
Kane was resentenced in Wayne County to over five years and two additional
months. That would have totaled one year. Prosecutors appealed that sentence.
Kane said that he has "been punished already" and that God has him
"in the palm of his hand." Kane also was found guilty in 2014 of
embezzling between $1,000 and $20,000 from the Angel Fund and other crimes.
Charity Check Up:
Aid To War-torn Region Suspended Because of Fraud
The U.S. government has put more than $200 million in contracts for
humanitarian aid to Syria on hold amid fears that corruption is draining money
from relief efforts, reports The Washington Post. The aid freeze has affected
delivery of food, medicine, and other life-saving supplies to Syrian civilians
as authorities pursue an investigation the government formally announced in
April.
Details of the review and its impact emerged in a Congressional hearing
this month. The U.S. Agency for International Development has opened 25
investigations, and contracts worth $239 million have been suspended. Global
aid charities GOAL, International Medical Corps, and the International Rescue
Committee are among the groups under review. They said they are cooperating with
investigators. (Chronicle of Philanthropy)
Alabama charity $11 million fraud
The former chief
financial officer of an Alabama clinic network--- Birmingham
Health Care--- was sentenced to 17
years in prison for her role in steering $11 million from the charity to its CEO.
She was also ordered to forfeit nearly $2 million she received in
connection with the scheme and to pay more than $500,000 in back taxes. She
admitted last year to stealing $1.7 million
from the federally-funded center for the poor and homeless
A Thought
or Two:
RAY DALIO at Bridgewater Associates shares some
thoughtful fundamental life principles that are certainly applicable to today’s
charitable environment. We will present one principle each newsletter. (principles)
Get
Over “blame” and credit”
Get
on with ‘accurate’ and “inaccurate”
Nonprofit
News…
In
Case You Missed It:
1. IRS officials are investigating the Clinton
Foundation for alleged fraud after dozens of lawmakers asked the tax agency to
open an inquiry. (source)
2. A Huntersville (NC) headmaster pleaded
guilty to a scheme that ripped $9 million from his school and church to fund a
lavish lifestyle. Wayne Parker, Jr., of Mooresville, took over as headmaster at
Southlake Christian Academy in 1996. He stepped down in 2014 after the
Southlake officials launched an investigation on the discovery of missing
funds. In a criminal complaint
filed in federal court on Friday, prosecutors accused Parker of stealing funds
for everything from homes, to luxury vehicles, to Carolina Panther's preferred
seat licenses. Investigators said he built at least two homes for his family
with School and Church money.
Prosecutors said in 2000, four years after
taking over as headmaster, he was living in a trailer. He stole funds to build
a 3,140 square foot house.
Investigators said in 2010, he built an even
larger lakefront home. In order to properly fund it, he made all the school
employees take a 5 percent pay cut and claimed it was due to tough economic
conditions.
3.
Former
Cleveland Brown Reggie Rucker was sentenced to 21 months behind bars for
embezzlement. Rucker struck a plea deal with prosecutors. He admitted
embezzling more than $110,000 from urban peacemaker groups he oversaw.
Prosecutors believe he stole more but that's the amount they were prepared to
prove in court.
4.
Three months after
record floods swept through Louisiana in March, the government officials in
charge of disaster response set up a post-mortem with area Red Cross staffers. There had been so much turnover at the
Red Cross that government emergency managers didn’t know who to call for
assistance; that Red Cross staffers didn’t call emergency managers back; and that the Red
Cross didn’t provide enough shelter support. “American Red Cross was a HUGE
disappointment,” Dawn Williams, the emergency manager for Richland Parish, said
in a May 24 email responding to the call-out. “They
made commitments that they didn’t keep and then chastised us for rejecting
them. Nothing was resolved from our numerous sit-down meetings we had with [the
American Red Cross] and their representatives.” (ProPublica)
5. Attorney General Kamala D. Harris announced the
arrest of Kevin Manzon felony charges of grand theft for embezzling money from
multiple charitable organizations in the Sacramento area. According to the
criminal complaint filed in Sacramento Superior Court, Manzon illegally
directed $1 million in funds from Cathedral Pioneer Church Homes Inc.,
Cathedral Pioneer Church Homes Foundation, and the Pioneer Foundation to
personal bank and business accounts and used the funds for personal expenses
such as jewelry and cars.
6.
Remember Bobby Thompson? It’s the
pseudym that was used by John Cody .He stole many millions of dollars under the
noses of the FBI, IRS, State charity watchdogs and uncovered by the press.
$50,000 that the government got from his looting
of the United States Navy Veterans Association, a charity he ran in Tampa,
Florida, is going to the Ohio Military Veterans Legal Assistance Project
arranges legal services for low-income military veterans and active service
members who can't afford an attorney. Illinois Attorney General Lisa Madigan announced a $100 million
settlement with Barclays on Monday following an investigation into fraudulent
manipulation of interest rates. Barclays Bank PLC and Barclays Capital Inc.
manipulated LIBOR, a benchmark interest rate that affects financial instruments
worth trillions of dollars and has a widespread impact on global markets and
consumers, according to a statement from Madigan’s office. Government entities and nonprofits in Illinois and
across the country were defrauded when they entered into swaps and other
investment instruments with Barclays. Government entities and nonprofits that
entered into LIBOR-linked swaps and other investment contracts with Barclays
between 2005 and 2010 will be notified if they are eligible to receive
restitution from the $93.5 million settlement fund, prosecutors said.
We flagged these few
examples of charity misdeeds:
1. The Providence Plan (RI) hundreds of thousands of
dollars
2. Sequoyah Fund (NC) $1 million
3. Chronic Disease Fund (KY) $1.1 million
4.
Camarillo Fiesta (CA)
$26,000
5. Hero Program (CA) $90,000
6. Family Visitation Center (ID) $45,000
7. Simi Valley Community Foundation (CA) unknown
8. Central Valley Community Foundation/ Ventura County Community Foundation (CA) unknown
9. Miracles Club (OR) $144,000
10. Blessed Sacrament / St. Francis Xavier (MI) $40,000
11. Metropolitan Community Church (OR) $70,000
12.
Human First (NY)
hundreds of thousands of dollars
13. Putney Family Services (NH) $41,000
14. Sedalia
Girls Softball League (MO) $35,000
15. Warrenton Foundation (VA) unknown
16. Moorpark Little League (CA) $900
17. Dallastown Cougar Athletics $5700
18. Community Hospice (CA) $25,000
19. Triangle Area Network (TX) $323,000
20. St. Francis of Assisi School (NH) $152,0000
21. Canadian County Court Appointed Special
Advocates (OK) at least $10,000
22.
Gene Autry Museum (OK)
$35,000
23. Talent
Managers Association $42,000
24. Bricklayers & Allied Craftworkers union (IL)
$250,000
25. Utah Communications Authority (UCA) $1 million
26. La Crosse Police Department $72,000
27. American Legion (CA) $20,000
28. Buckhannon Work Adjustment Center Inc. (WV) $25,000
29. Baby Girl LLC $56,000
Political/public official chicanery (just a few):
1.
The former police chief
of Shelby (MI), fired in January amid allegations of financial wrongdoing, was
arraigned on six criminal charges, including embezzlement of an estimated
$70,000.
2.
An external auditing
firm is investigating a case of embezzlement at Palestine (TX) Independent
School District.
3.
The head of Rockingham County's (NC) technology division was arrested
today. David Whicker is charged with embezzlement by an officer, agent or
employee of a local government, Rockingham County Manager Lance Metzler said.
Whicker is Rockingham County government's chief information officer. Whicker is accused of selling county
items at a pawnshop in Kernersville.
4.
A
former associate superintendent at the San Francisco Unified School District
has pleaded guilty to 10 felony charges in connection with the alleged
misappropriation of $15 million in public funds, while agreeing to cooperate in
the prosecution of her co-defendants.
5.
A former bookkeeper at
Janesville (WI) Craig High School was sentenced for felony fraud charges for
embezzling more than $300,000 over nine years. She was sentenced in Rock County Court to two years in
prison, three years extended supervision plus 12 years probation.
6.
Former Lawrence (KS)
Mayor Jeremy Farmer has been charged with embezzling thousands of dollars from
a Douglas County food bank.
7.
A former Oneida
Township (MI) clerk will spend at least two years in prison for stealing township
funds.
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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