Nonprofit
Imperative
…Your nonprofit browser
July
2013
The
twice-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:
Big Brothers Big
Sisters…more
Charity Check Up:
Ridgewood
Bushwick Senior Citizen’s Council
A Thought or Two:
New Light Baptist
Church
Nonprofit News-In Case You Missed It:
ARC of Ventura; ARC of Tex…more
Political/Official Chicanery:
WV; ME; IL; NC; OH; PA; OK; VA; NM…more
What Do You
Think?
The Department of Health and Human Services Office
of Inspector General is set to lose a total of 400 staffers that are deployed
nationwide as a primary defense against health care fraud and abuse. (Medicare fraud outrunning enforcement efforts, The
Center for Public Integrity)
…nonprofits and
foundations continue to embrace a culture of silence and politeness that gets
in the way of their growth and vitality. (Cindy Gibson, contributed a terrific op-ed to the Chronicle
of Philanthropy)
__________________________________________
"I ran a for profit charity. I did not agree with the fact that only 20
percent went to the charity…” (Man
Accused of Charity Fraud Denies Allegations)
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.”
Big Brothers, Big Sisters In Trouble Again
Big Brothers Big Sisters, a
non-profit charity organization that has existed in some form since 1904, has
recently come under fire by the US Justice Department (DOJ) for its inability
to account for nearly $20 million in funds awarded to it to carry out its
duties. The problem stems from the fact that the funds were co-mingled with
other funds in such a way that there could be no accounting for how the money
was spent – a problem because the DOJ awarded the monies for very specific
programs. Those programs, which included help for tribal, military and other
at-risk youth, may or may not have received the intended funds.
The co-mingling of the $19.2
million is not the only error unearthed by the Inspector General. It was also
discovered that $12.6 million of DOJ funds went unmonitored at organization
affiliates
AG: Aid Never Reaches
Recipients
The 19 charities all had buzzwords in their names
intended to appeal to Jews eager to help Israel — including Hatzalah, a
reference to the volunteer ambulance service primarily serving Jewish
communities, and Zaka, a reference to the organization that assists victims of
terrorist attacks.
But Eric T. Schneiderman, the attorney general
of New York State, charged that the operators of the charities “brazenly abused
the generosity of the public” by withdrawing more than $2.5 million for their
personal and family expenses from 2007 to 2013. He said the expenses included
home mortgages, the remodeling of a second home, car loans, dentist visits,
video rentals and a trip to the Borgata Casino in Atlantic City.
Only a small amount of the donated money
actually wound up in Israel. The defendants even bounced at least 2,100 checks,
and wasted $65,000 of charitable donations in overdraft fees, the attorney
general charged. (source)
Among the organizations named in the lawsuit are Hatzalah Rescue of
Israel, Bnei Torah, the Israel Leukemia and Cancer Society and Zaka Israel.
Only 2 of the 19 entities were even registered in Israel. Others did not file
tax returns that protected their tax-exempt status, Mr. Schneiderman said.
The organizations solicited money by mail, telephone and the Internet,
often falsely telling donors that they had failed to follow up on a pledge or
that they had previously donated to the charity, the complaint said. The name
of an organization like Magen Israel played off the Israeli equivalent of the
Red Cross. The solicitations also used “doctored photographs” of workers and
equipment belonging to actual Israeli emergency organizations, the complaint
said.
A Charity Check Up:
N.Y. Council Ignores History Of This Charity: Gives Tons Of
Money
The Ridgewood Bushwick Senior
Citizens Council, a nonprofit founded by former New York Assemblyman, Vito
Lopez, recently received $421,964 in discretionary funds from the New York City
Council The funds were awarded despite
previous accusations of mismanagement at the nonprofit
and despite Lopez’s departure from office in May because of accusations of
sexually harassing staff members.
Eight
former Lopez staffers, all young women, described his lurid behavior to state
investigators. Some were forced to massage his body. The cancer-stricken Lopez
allegedly rubbed the thighs of others — and even forced one woman to feel his
tumors. Some of the alleged acts took place during car trips to and from
Albany, Long Island and Atlantic City, which might explain why a special
prosecutor left open the possibility that crimes were committed outside of
Brooklyn.
In addition, Christiana Fisher, the former $782,000 chief executive of the Ridgewood
Bushwick Senior Citizens Council, pleaded guilty to a misdemeanor count of
criminal contempt and faces up to six months in prison. Ms. Fisher acknowledged
allowing the Brooklyn charity to give a grand jury inaccurate documents that
purported to show the council’s board had approved a hefty increase in her pay.
She had been involved with the organization since shortly after its incorporation
in 1976 by state Assemblyman Vito Lopez but was forced out of her executive
position earlier this year.
A Thought or Two:
Is This Something The IRS Can Now Focus On?
A pastor of the New Light Christian Center Church, which has six locations in
Texas, emailed a flyer asking members of his church to donate money
so that he could replace the blades on his helicopter. The flyer quotes bible
scripture, stating, “We have an urgent transportation need that the Lord said
can be an opportunity for you to see His favor and His wisdom released to help
you.” He said the Lord will issue a favor to congregants that might help them
obtain their dream vehicle.
The helicopter blades cost $50,000. My Fox Houston reported the church’s Bell Jet Ranger
Helicopter is worth $1 million. The chopper is allegedly used to transport
Hilliard from church to church. The pastor and his wife personally own a
private jet: a $2 million Hawker. New Light owns the hanger where it is housed,
valued at $3 million.
Nonprofit News…
In
Case You Missed It:
1 For the first time in 40 years the NY State Senate
has overhauled state laws that govern charities and other not-for-profit
organizations. The Nonprofit
Revitalization Act reduces unnecessary, outdated, and costly burdens to help
not-for-profit organizations focus resources on providing services. It will
improve oversight of operations that will have the dual role of providing
organizations with better financial management and increasing the public trust
those donations and taxpayer funds are being put to proper use. Key provisions
of the Act include: 1. Reducing bureaucracy and costly requirements by amending
rules governing not-for-profit property sales, mergers, corporate formations,
and dissolution’s to create a more welcoming environment for new
not-for-profits and a more business-friendly environment for existing ones. It
will also increase efficiency by modernizing board procedures, such as enabling
not-for-profits to use email and video technology for meetings, and allow
boards to delegate the approval of small transactions to committees. 2. Strengthening
accountability and enhancing charitable governance by setting forth clearer
expectations of board duties in key areas, such as providing better financial
management and oversight over financial audits. It includes new provisions to
limit and, when necessary, remedy self-dealing to prevent conflicts of interest
and ensure transactions are performed in the organization’s best interest.
Employees of a nonprofit will also be prohibited from serving as chair of the
board to help promote clear lines of accountability between management and the
board and ensure independent board leadership.
2 Two dozen Haitian boys will each receive
$500,000 in a settlement on their claims of sexual abuse at the hands of Douglas Perlitz while enrolled in Project Pierre
Toussaint, a residential trade school in Cap-Haitien. The defendants were
accused of promoting and raising money for Perlitz's program but failing to
properly supervise him. Perlitz is serving a nearly 20-year federal prison term
for traveling overseas to engage in sex with a minor. The defendants: Fairfield University; the Rev.Paul Carrier, a former
university chaplain and officer of the Haiti Fund, the now
defunct fund-raising arm of Project Pierre Toussaint; the Society of Jesus of New England, the Jesuit order to which
Carrier belonged; the Sovereign Military Hospitaller Order of St. John of Jerusalem of Rhodes and of Malta, American Association, USA, of which Carrier was Magistral
chaplain; and Hope Carter, a member of the board of
directors of the Haiti Fund, a New Canaan philanthropist and Malta member.
3 Citing massive budget and staff cuts, federal officials are
set to scale back or drop a host of investigations into Medicare and Medicaid
fraud and abuse — even though cracking down on government waste and cutting
health care costs have been top priorities for the Obama administration. The
existing staff is already stretched so thin that the agency has failed to act
on 1,200 complaints over the past year alleging wrongdoing — and expects that
number to rise. The OIG began shedding staff at the beginning of the year.
“We’re set to lose roughly 400 bodies out of a total of 1,800 at our peak in
2012.” said Deputy Inspector General for
the OIG Office of Investigations. The inspector general reported expected
recoveries of about $5.2 billion from audits and investigations in fiscal year
2011. Federal agencies reported an estimated $115.3 billion in improper
payments in fiscal year 2011, and more than half that figure was attributed to
Medicare and Medicaid, according to the Government Accountability Office.
4 City Council Speaker Christine Quinn doled out hundreds of thousands of dollars in taxpayer funds
from the just-passed city budget to nonprofit groups whose board members and
executives have given money to her mayoral campaign. The Daily News examined
the two dozen organizations that received the biggest grants from Quinn and
found that 14 had ties to contributors who gave or raised a total of more than
$210,000 in support of Quinn’s candidacy. The contributions came from directors
and staffers of those nonprofits and their immediate families, according to
campaign finance records.
5 Another breast cancer charity! CO. Attorney General John Suthers says his investigators with the
Consumer Protection Section found proof that Se7ven Group, and Say No 2 Cancer
owner Adam Shryock used the money he raised, "to buy himself a BMW,
subscribe to an online dating service, and pay his bar and cleaning service
tabs."
6 It’s been nearly seven months since the
Sandy Hook massacre. Although over $10 million in donations poured into the
fund, none of the money has been disbursed amid a battle with the Sandy Hook
Community Foundation over the amount the families will get, how much goes to
the community, and the process being used. It is expected that a decision
should take place by August.
Justice
Watch
Judges, prosecutors and others have
coddled criminals convicted of charity fraud in their sentencing…and it is
rampant. All use jail overcrowding and other spurious excuses for lenient
prosecution and sentencing. Restitution is frequently ordered in lieu of
prison, but it is seldom discharged with less than 50% of the criminals even
paying one penny. This result is a free pass for the criminals. We are
watching!! (just a few examples).
1. A Michigan man will have to pay back the more than
$125,000 he embezzled from his former employer
after pleading guilty to criminal charges to avoid incarceration. Based on
national statistics there is little likelihood that there will be full
restitution.
2. Although they took $334,000
in donations without having the necessary approvals and spent some of it
on personal possessions, the court agreed to a settlement of $334,000 and no
other financial or incarceration penalties. All of the donors will be out of their
money because the money will be distributed to other charities. The perpetrators cannot start any new charities for two years. They are also not permitted to engage
in any future Hurricane Sandy fundraising.
We flagged these few examples of nonprofit mischief
1.
ARC of Ventura County
(CA) $450,000
2.
Grady Memorial Hospital
(GA) $500,000+/_
3.
Border Lodge Credit
Union (VT) “several hundred thousand”
4.
Bennington Rural Fire
Department $675.
5.
Helping Out, LLC, also
known as “Helping Out,” and the Smiles for Kids Foundation, also known as
“Smiles for Kids,” “the Smiles for Kids Foundation, Inc.,” “the Smiles 4 Kids Foundation,”
and “Smiles 4 Kids” (IL) $120,000
6.
Communications Workers Local 84555 (MI)
$20,000
7.
Brunswick County (VT)
school board $3800
8.
Career Alliance (MI)
$1000
9.
Oregon Rise $100,000+
10. Pinecrest Elementary Parent Teacher Council (MI)
$7000
11. Bangor Kiwanis (ME) $140,000
12. Auburn (NY) Teacher Association over $800,000
13. Pinal County (AZ) Federal Credit Union $780,000
14. Christmas Bureau (TX) $100,000
15. Room in the Inn (TN) $75,000
16. Cold Hollow Cider and the Harwood Youth Hockey (VT) over $100,000
17. Middleboro PTA (MA) $30,000
18. The Arc of Ventura County (CA) $425,0000
19. The ARC of Texas $230,000
20. Fayette County (OH) Memorial Hospital $20,000
21. Boobies Rock (CO) $1 million
22. Springboro Athletic Boosters (OH) $440,000
23. Friends of Bluffton Dog Park (SC) $19,000
24. Healdsburg (CA) youth soccer $51,000
25. Ferry Elementary School (MI) <$20,000
26. Focus Up Ministries’ /Profitable Sunrise (OH)
Millions
27. Centre County United Way (PA) $17,000
28. Vicksburg Elementary (MI) <$20,000
29. Mothers Against Drunk Driving Victims Impact Panel
(NM) <$25000
30. Dougherty Elementary Parent Faculty Club (CA) more
than $38,000
31. Ritenour High School (MO) <$20,000
Political/public official chicanery (just a few):
1.
The State Bureau of
Investigation has arrested the chief jailer in the Greene County Sheriff's
Office and faces embezzlement charges of about $10,000 missing from the inmate
jail account earlier this month.
2.
A longtime West Virginia
employee was arrested after investigators said he stole $25,000 from taxpayers.
3.
The
former Troy (ME) town treasurer was arrested Wednesday on charges that she
stole at least $19,813 from the town office.
4.
A onetime aide to former
Democratic state Rep. Connie Howard, of Chicago, faces a federal mail fraud
charge as prosecutors allege he spent more than $217,000 in AIDS awareness
grant money on a house, football game skyboxes and interns who did work for a
public official. Kelly served as executive director of the Let's Talk, Let's
Test Foundation, a nonprofit he formed in 2003 to help stop the spread of HIV
and AIDS in the African-American community, where transmission rates had
remained high.
5.
The
former Cherryville (NC) police chief has been charged with embezzling more
than $11,000 of city funds by forcing the Cherryville Finance Director to issue
Cherryville city checks to "The Great Outdoors, Inc." for purchase of
firearms for Burgess' personal use.
6.
A Cuyahoga
Falls (OH) Library employee is facing a pair of felony charges following a
three-month investigation into missing money from the library. She is accused
of embezzling nearly $350,000 since 2007 while working at the library as its
fiscal officer.
7.
A Westmoreland County
(PA) man has been indicted on accusations that he embezzled approximately
$13,255.90 from the sale of stamps and postal money orders during an 18-month
period at an Armstrong County post office.
8.
A
bookkeeper with Pawnee County (OK) Rural Water District No. 1 has been charged
with embezzling more than $48,000 from the organization. Former Cherryville Police Chief Woody Burgess appeared in
federal court and pleaded guilty to embezzlement of $11,000. Federal
prosecutors said that for nearly a year the veteran lawman had instructed the
city’s then-finance director to issue checks to buy firearms from a sporting
goods store for his personal use. Also caught up
in the scandal was former Cherryville Finance Director Bonny Alexander, who was
accused of stealing more then $450,000 from the city. She has pleaded guilty to
five counts of embezzlement.
9.
The
former chief of the 11th Judicial Circuit’s Public Defender (WV) office was
arraigned on an embezzlement charge.
10.
The
former Pineville Town (WV) Manager will spend 18 months in a federal prison
followed by three years of supervised probation for using her employment
position to embezzle $80,000 from the town.
11.
She took
$144,725 over an eight-month period from the Orangeburg Treasurer’s
Office while she worked there.
12.
A former Newport News (VA) police
officer was arrested by Hampton police on felony embezzlement
charge a week after pleading guilty to a federal fraud charge in a separate
case.
13.
A trial
is set for a husband and wife accused of embezzling federal funds from the Taos
County (NM) Housing Authority--- over a 10-year period. A federal grand
jury indicted the couple on 49 counts. The indictment alleged that the couple
was stealing housing funds by writing fraudulent checks and depositing them in
area banks at least once a month.
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
there is money missing.
Cites
in various media:
Featured in print,
broadcast, and online media outlets, including: Charity Navigator, Vermont
Public Radio, Miami Herald, National Public Radio (NPR), Huffington
Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal
(Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity
Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, nbcnews, Marie Claire,
Ethics World, Aspen Philanthropy Newsletter,
Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of
Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics,
Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York
Times, 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, Finance and Administration
Roundtable Newsletter, 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, msnbc.com,
Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO
Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin,
Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit
Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald,
The
HelpWise Daily, The
#Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com,
- Silence:
The Impending Threat to the Charitable Sector (Xlibris, 2011)
- 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, 2013
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)
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