Tuesday, November 27, 2012

Nonprofit Fraud: Is the Salvation Army Worthy of Our Contributions?

by Gary Snyder

The former executive director of a Salvation Army facility has been recently charged in a massive theft of thousands of toys and donations from the charity's Toronto warehouse. The Salvation Army announced the theft just weeks ago, saying up to 100,000 items worth about $2 million were allegedly stolen from the facility. The executive had been fired. In January 2005, an employee of the Toronto Salvation Army was charged with stealing in excess of $1 million.
This is on the heels of a tidal wave of similar frauds, over the years, at the Salvation Army:
  • ·       The Salvation Army embezzlement at the New Philadelphia citadel ended in a no contest plea thus admitting that the facts in the charges are true. She was a Salvation Army captain. She had a previous conviction for altering a prescription for pain medication. She was placed on probation. The Dover/New Philadelphia Corps Officers have replaced staff  and restructuring at the Dover facility in under way. 
  • ·       In Tulsa, A former finance director at the Salvation Army took $205,468 in an embezzlement case. It took over three years to catch her.
  • ·       In Atlanta, a Salvation Army employee was indicted on charges she stole $200,000 in financial aid funds. The alleged crimes occurred from 2004 to 2007.
  • ·       The financial manager of the Salvation Army's Newark in New Jersey pleaded guilty to tax evasion and conspiring to embezzle. He admitted to cutting 585 checks worth approximately $385,000, which were supposed to be used for charity purposes. It took seven years to catch him.
  • ·       A human resources director and an office manager for the Salvation Army, in Montgomery, Al was arrested and charged for embezzlement.
  • ·        prison escapee landed a position as planned giving director at Salvation Army Hawaii.  He had deposited at least $150,000 in Salvation Army checks to an account he controlled and received deeds to properties valued at over $200,000.
  • ·      An accountant had been indicted on charges of stealing $166,914 from the New York Division of The Salvation Army. His principal responsibility was keeping the financial and administrative records of two Salvation Army programs. The money he stole from the Salvation Army homeless shelters went to pay restitution on an earlier fraud committed against another Manhattan non-profit organization, the Jewish Telegraphic Agency, a news service for the Jewish community.  For about three years, Keaton worked for JTS organization as an accountant and stole over $24,000.
  • ·       The pastor of a trucking ministry in Oklahoma was charged with taking money from a Salvation Army thrift store while employed as its manager. The investigation led to his 1981 sentence for a felony theft conviction in Maryland. He was extradited to Maryland on a governor's arrest warrant issued in 1984 for violating his probation.
  • ·       Ottawa’s Salvation Army has fired its executive director following an internal audit. Toronto-based Major John Murray of the organization’s public relations and development division, said $240,000 has gone missing from the George St. Booth Centre
  • ·       The operations manager of the Redding Salvation Army thrift was charged with embezzling $98,000 over a period of eight years. 

In the late 1990s, the American Institute of Philanthropy communicated its concern that The Salvation Army’s governing body is rather insular for such a large charity, Lieutenant Colonel Tom Jones, Community Relations and Development Secretary of The Salvation Army said that to get to the position that The Salvation Army is in they must have the absolute integrity and that considerable checks and balances have been put in place over 30 years. Ouch.

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)


Anonymous said...

Always sad to hear about people using non-profits for personal gain... hopefully we can do more to prevent it from happening.
-Jon @ nonprofit software

Anonymous said...

The Managers at the thrift stores steal, they steal donations they make private deals with antique dealers and keep the money, everyone knows it but no one does anything about it. the local store here nothing of real value ever makes it to the floor. the employees who sort the stuff steal, they keep all the money and valuables small enough to stick in their pockets. but you know they get paid minimum wage and after several years don't even make 10 an hour for back breaking work. They have to stand at the tables all day and aren't allowed even a stool. That's so very Christian. The managers accept all the donations coming in the back door so that they can pilfer everything of value that they can find especially jewelry and antiques,(and yes they get valuable jewelry donated). the organization does not have cameras in most of the stores to try to curb this.

Anonymous said...

I totally agree with the above. A lot of items never hit the floor. Copious amounts of small items are sold on eBay. Purchase by employees. Sold to regulars and dealers. I have heard this straight from employees. It is an accepted practice at least in the store near me. Stop in on your way to Cape Cod.

Anonymous said...

Salvation Army world wide operate on a so called charity funding yearly through out all the world. Whether it is Open day, Food fair, Yearly appeal, Anniversary Dinner and whatever. When there are fund raising, all money collected will be bank into a fund call “General Fund”. This fund can be use for anything or channel to any fund. You can name it whatever term you like. From here they will divide it to 3 parts usually. 1/3 (Social Fund) for Home(Charity – Boys/ Girls under priviledge) other centers, another 1/3 is for their so called Church community service (called Community Service Fund), and another 1/3 for Church funding (called Corps Fund). Or they can do whether they like without being trace or audited.

So by taking the above formula, your good heart earn money towards helping the needy or poor is not actually materialize. Only 1/3 goes to the related centers or home of the needy they operate. 1/3 goes to the so called community service. Why you need so many community service where you already have a home, and related centers? . And another 1/3 will go to their Church operation. The formula could be different various places. But the above is standard most time.

For me as person, I believe public donated fund for charity should not be misused and channel for other purpose rather than the original fund raising objectives itself. In the case the social fund only.

It is my great regret that the operation has been going for a long time without me knowing it until came know about from a good source which is verified.

I think public deserved to know about it so that the donated money are actually goes 100% to the beneficial. Salvation Army always mention that 80-90% or 100% goes to the beneficial. So this is untrue.

Even though I was once a beneficial from the Salvation Army, I do not think this is a right thing to do.

As a Christian organization, they should do the right thing with the donated money solely for social fund channeling mostly 80-85% to the poor after deducting expenses and etc. I understand no organization can run away from operating cost. However if you really do a charity work, you will give whole heartedly and not mischannel funding for other purpose.

The church have to fund it’s own. It is not right to channel from a public donated money for social fund to help the poor for the operation of the church.

A lot of members (soldiers) of the Salvation Army church might know about this. I do not blame them as they are also blinded.

I hope with this information the public are aware what is going on and make the right decision.

Another thing is that please also note that their thrift store profits made from good sold from public donated are also channel to the “General Fund”… from they will channel to whatever fund they like. They will apply the same method I mentioned before or any other ways.

God please forgive me as a sinner if I mention the wrong thing. I feel it is just not right to mischannel fund from its original purpose to help the poor or needy where it was suppose to be.

Anonymous said...

The theft is rampant. And the prices are marked up in an exhorbiant way to cover for the theft. A worn tee shirt is 5.99 for a donated item? On the days the color tags are to go on sale for 5 for 5 dollars they are remove from the floor. Good luck finding that color tag for the day. Its all a sham. Clothing racks are overflowing with over priced clothes because the average people who really NEED help are priced out of the market. The greed and selfishness is so obvious the minute you enter the place. The employees are ever rude and non giving like you're asking for a deal at neiman marcus stores. Playing musical tags is no fun its like dangling cheese in front of mice, and snatching it away when the sale date arrives. May as well wait for sales at department stores. The prices are comparable and the at least the items are new.

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