by Gary Snyder
Audits often miss thieves' sophisticated attempt at fraud.
For six years, Drake University’s student accounts director was stealing from the university. Suspicious that there was malfeasance, the Drake Vice President that oversees business and finance, asked outside auditors to look at student accounts a year and a half ago. This in spite that internal auditors at Drake checking annually for proper management of university operations. Two Drake University audits failed to turn up a pattern of missing money from student accounts. Finally a recent internal investigation turned up evidence that led to police charging former Drake employee in connection with the embezzlement of $470,000 from the institution.
Friday, April 22, 2011
Monday, April 18, 2011
A Best Seller Charity Under Scrutiny
by Gary Snyder
Greg Mortenson has several best sellers. One is Three Cups of Tea which has sold more than four million copies and is required reading for U.S. servicemen bound for Afghanistan.
The book and his non-profit organization, the Central Asia Institute (CAI), are being called into question. CBS and 60 Minutes began investigating complaints from former CAI donors, board members, staffers, and charity watchdogs about Mortenson and the way he is running his non-profit organization.
They found there are serious questions about how millions of dollars have been spent, whether Mortenson is personally benefiting, and whether some of the most dramatic and inspiring stories in his books are even true. Mortenson says the charity took in $23 million in contributions last year - some it from thousands of school children who emptied their piggy banks to help its "Pennies for Peace" program, and some of it from large fundraisers. President Obama donated $100,000 to the group from the proceeds of his Nobel Prize.
It has only had one financial audit since its inception. Some charge the Central Asia Institute's financial statements show a lack of transparency, and a troublesome intermingling of Mortenson's personal business interests with the charity's public purpose. According to Daniel Borochoff, president of the American Institute of Philanthropy, says that most of the program spending is not to help kids in Pakistan and Afghanistan, it's actually... what they call domestic outreach where he goes around the country speaking and the cost incurred for that, things like travel is a major component of that. It is just advertising for the books. Only 41 percent of the money CAI spent in FY 2009 actually went to schools in Pakistan and Afghanistan. The financials list $1.7 million in "book-related expenses." more than they spent on all of their schools in Pakistan last year. In fiscal year 2009, the charity spent $1.5 million on advertising to promote Mortenson's books in national publications, including a full-page ad in "The New Yorker." And there are $1.3 million in domestic travel expenses, some for private jets. CAI’s travel expenses activities are integral to our mission and operations.
In 2002, his board treasurer quit, resigned, along with the board president and two other board members and said, "You should stop giving money to Greg." The IRS tax return Central Asia Institute filed last year included a list of 141 schools that it claimed to have built or supported in Pakistan and Afghanistan. Over the past six months, CBS visited or looked into nearly 30 of them. Some were performing well, but roughly half were empty, built by somebody else, or not receiving support at all.
The Central Asia Institute's board of directors indicated that Greg worked for many years for little or no compensation, but is now paid a salary by the Institute as its Executive Director.
Greg Mortenson has several best sellers. One is Three Cups of Tea which has sold more than four million copies and is required reading for U.S. servicemen bound for Afghanistan.
The book and his non-profit organization, the Central Asia Institute (CAI), are being called into question. CBS and 60 Minutes began investigating complaints from former CAI donors, board members, staffers, and charity watchdogs about Mortenson and the way he is running his non-profit organization.
They found there are serious questions about how millions of dollars have been spent, whether Mortenson is personally benefiting, and whether some of the most dramatic and inspiring stories in his books are even true. Mortenson says the charity took in $23 million in contributions last year - some it from thousands of school children who emptied their piggy banks to help its "Pennies for Peace" program, and some of it from large fundraisers. President Obama donated $100,000 to the group from the proceeds of his Nobel Prize.
It has only had one financial audit since its inception. Some charge the Central Asia Institute's financial statements show a lack of transparency, and a troublesome intermingling of Mortenson's personal business interests with the charity's public purpose. According to Daniel Borochoff, president of the American Institute of Philanthropy, says that most of the program spending is not to help kids in Pakistan and Afghanistan, it's actually... what they call domestic outreach where he goes around the country speaking and the cost incurred for that, things like travel is a major component of that. It is just advertising for the books. Only 41 percent of the money CAI spent in FY 2009 actually went to schools in Pakistan and Afghanistan. The financials list $1.7 million in "book-related expenses." more than they spent on all of their schools in Pakistan last year. In fiscal year 2009, the charity spent $1.5 million on advertising to promote Mortenson's books in national publications, including a full-page ad in "The New Yorker." And there are $1.3 million in domestic travel expenses, some for private jets. CAI’s travel expenses activities are integral to our mission and operations.
In 2002, his board treasurer quit, resigned, along with the board president and two other board members and said, "You should stop giving money to Greg." The IRS tax return Central Asia Institute filed last year included a list of 141 schools that it claimed to have built or supported in Pakistan and Afghanistan. Over the past six months, CBS visited or looked into nearly 30 of them. Some were performing well, but roughly half were empty, built by somebody else, or not receiving support at all.
The Central Asia Institute's board of directors indicated that Greg worked for many years for little or no compensation, but is now paid a salary by the Institute as its Executive Director.
Friday, April 15, 2011
Academics Have Their Hand In The Till, too
By Gary Snyder
Karen L. Pletz, a 63-year-old Kansas City, Missouri woman, was the president and CEO of Kansas City University of Medicine and Biosciences (KCUMB) from 1995 until the end of 2009. She is now facing embezzlement charges. The F.B.I. is alleging that she was also pocketing over $1.5 million by embezzlement from that university. KCUMB appears to have taken the biggest hit with nine 'leadership stipends' that generally were in $65,000 lump sum payments. Pletz is alleged to have created minutes for nine fake KCUMB executive committee meetings authorizing these payments for October 2002 until December 2009. The total sum of these payments was $1,409,500.
In addition to these payments it is being alleged that the CEO submitted fraudulent vouchers to obtain reimbursements from the university for business purposes that were in fact for her personal travel and entertainment. These vouchers included trips to visit her parents, friends and an $11,846 reimbursement for items purchased at a Vera Wang boutique at Halekulani Hotel in Honolulu, Hawaii. Pletz did not include these payments that totaled $1,074,917 as part of her income on federal income tax reports. The tax loss to the nation was at least $280,000.
Karen L. Pletz, a 63-year-old Kansas City, Missouri woman, was the president and CEO of Kansas City University of Medicine and Biosciences (KCUMB) from 1995 until the end of 2009. She is now facing embezzlement charges. The F.B.I. is alleging that she was also pocketing over $1.5 million by embezzlement from that university. KCUMB appears to have taken the biggest hit with nine 'leadership stipends' that generally were in $65,000 lump sum payments. Pletz is alleged to have created minutes for nine fake KCUMB executive committee meetings authorizing these payments for October 2002 until December 2009. The total sum of these payments was $1,409,500.
In addition to these payments it is being alleged that the CEO submitted fraudulent vouchers to obtain reimbursements from the university for business purposes that were in fact for her personal travel and entertainment. These vouchers included trips to visit her parents, friends and an $11,846 reimbursement for items purchased at a Vera Wang boutique at Halekulani Hotel in Honolulu, Hawaii. Pletz did not include these payments that totaled $1,074,917 as part of her income on federal income tax reports. The tax loss to the nation was at least $280,000.
New Yorkers-See Where Your $$ Is Going
by Gary Snyder
The New York Independent Service Operator -- the nonprofit in charge of the state's power grid—is inflating salaries, first-class travel and lobster luncheons for the fat cats in charge. Facing a possible 12 percent boost in electricity costs next month, its leadership is not hurting. Its president and CEO, Stephen G. Whitley, pulled down $875,000 in salary and $489,000 in benefits in 2009, according to its most recent IRS filings. Board Chairwoman Karen Antion, a former Port Authority executive, raked in $377,700 in pay and perks. Six of NYISO's nine board members make more than $100,000 a year -- for just 14 hours of work a week, the tax filings say. At least 20 of NYISO's 500 employees were paid more than $200,000 in 2009, up from 16 in 2007, the IRS filings show.
The New York Independent Service Operator -- the nonprofit in charge of the state's power grid—is inflating salaries, first-class travel and lobster luncheons for the fat cats in charge. Facing a possible 12 percent boost in electricity costs next month, its leadership is not hurting. Its president and CEO, Stephen G. Whitley, pulled down $875,000 in salary and $489,000 in benefits in 2009, according to its most recent IRS filings. Board Chairwoman Karen Antion, a former Port Authority executive, raked in $377,700 in pay and perks. Six of NYISO's nine board members make more than $100,000 a year -- for just 14 hours of work a week, the tax filings say. At least 20 of NYISO's 500 employees were paid more than $200,000 in 2009, up from 16 in 2007, the IRS filings show.
Monday, April 11, 2011
Fiesta Bowl: More Sad Stories
by Gary Snyder
If you can believe it, there is more on the Fiesta Bowl front...and it is not good.
With the out-of-control spending and improper practices that led the Fiesta Bowl to fire its top executive, a recent internal report on influence-peddling and spending abuses suggests that at least some board members neglected their duty of care, ignored warning signs and failed to impose checks or balances that might have prevented the scandal.
On page after page, the report describes key board members overlooking or even taking advantage of the bowl's lax controls. The report documented numerous instances in which individual board officers turned their backs on possible abuses or conducted business with apparent conflicts. Many of the failures involved financial practices.
According to investigators, the Fiesta Bowl had no rules requiring advance board approval for expenses and barely any system to verify billing claims. Even though board members believed much was "excessive" and "had absolutely no business purpose," they attended events and never challenged the expenditures.
Board members also received repeated warnings about unlawful political activity. One chairwoman was warned that the Fiesta Bowl employees were reimbursed for political contributions and a cover-up was under way and she did nothing.
The Fiesta Bowl adopted conflict-of-interest policies, but they were not enforced. The construction company of a former chairman in 2008 obtained four Fiesta Bowl contracts worth over $2 million without having to compete for the business. Another former board member and chairman received $5,000 per month to serve as liaison between the Fiesta Bowl and the Bowl Championship Series. There was no written contract. The report says two other board chairs authorized the agreement.
Don Meyers, a Fiesta Bowl founder and critic of the current board, says: "They didn't ask enough questions," Meyers said. "The excuse that we didn't know isn't sufficient."
Some board members are comfortable that current leaders are doing everything they can and should to repair the organization. This sounds quite similar to the fiasco at the Smithsonian Institution.
If you can believe it, there is more on the Fiesta Bowl front...and it is not good.
With the out-of-control spending and improper practices that led the Fiesta Bowl to fire its top executive, a recent internal report on influence-peddling and spending abuses suggests that at least some board members neglected their duty of care, ignored warning signs and failed to impose checks or balances that might have prevented the scandal.
On page after page, the report describes key board members overlooking or even taking advantage of the bowl's lax controls. The report documented numerous instances in which individual board officers turned their backs on possible abuses or conducted business with apparent conflicts. Many of the failures involved financial practices.
According to investigators, the Fiesta Bowl had no rules requiring advance board approval for expenses and barely any system to verify billing claims. Even though board members believed much was "excessive" and "had absolutely no business purpose," they attended events and never challenged the expenditures.
Board members also received repeated warnings about unlawful political activity. One chairwoman was warned that the Fiesta Bowl employees were reimbursed for political contributions and a cover-up was under way and she did nothing.
The Fiesta Bowl adopted conflict-of-interest policies, but they were not enforced. The construction company of a former chairman in 2008 obtained four Fiesta Bowl contracts worth over $2 million without having to compete for the business. Another former board member and chairman received $5,000 per month to serve as liaison between the Fiesta Bowl and the Bowl Championship Series. There was no written contract. The report says two other board chairs authorized the agreement.
Don Meyers, a Fiesta Bowl founder and critic of the current board, says: "They didn't ask enough questions," Meyers said. "The excuse that we didn't know isn't sufficient."
Some board members are comfortable that current leaders are doing everything they can and should to repair the organization. This sounds quite similar to the fiasco at the Smithsonian Institution.
Wednesday, March 30, 2011
Bowl Games Nailed...more to come
by Gary Snyder
Nonprofit Imperative told you about the free spending leaders of the Bowl Games. There has been a shake up in at least one. The chief executive of the nonprofit that runs college football’s Fiesta Bowl was fired after an internal investigation alleged that the charity’s leaders urged employees to make political contributions and reimbursed them with bogus bonuses. John Junker, who has led the Tempe, Ariz., game for three decades, had been on administrative leave since February for refusing to cooperate with an investigative panel commissioned by the organization’s board of directors. Natalie Wisneski, the chief operating officer, and Jay Fields, the vice president for marketing, have resigned. The investigators’ report, released Tuesday, also details alleged use of Fiesta Bowl funds on trips for Arizona politicians, a lavish 50th birthday party for Mr. Junker, and a $1200 visit to a Phoenix strip club. The Arizona attorney general’s office is investigating whether the allegations warrant a criminal investigation, and legal experts said it is possible the organization’s tax-exempt status could be at stake. We are confident that more heads will roll at other bowls in months to come.
Nonprofit Imperative told you about the free spending leaders of the Bowl Games. There has been a shake up in at least one. The chief executive of the nonprofit that runs college football’s Fiesta Bowl was fired after an internal investigation alleged that the charity’s leaders urged employees to make political contributions and reimbursed them with bogus bonuses. John Junker, who has led the Tempe, Ariz., game for three decades, had been on administrative leave since February for refusing to cooperate with an investigative panel commissioned by the organization’s board of directors. Natalie Wisneski, the chief operating officer, and Jay Fields, the vice president for marketing, have resigned. The investigators’ report, released Tuesday, also details alleged use of Fiesta Bowl funds on trips for Arizona politicians, a lavish 50th birthday party for Mr. Junker, and a $1200 visit to a Phoenix strip club. The Arizona attorney general’s office is investigating whether the allegations warrant a criminal investigation, and legal experts said it is possible the organization’s tax-exempt status could be at stake. We are confident that more heads will roll at other bowls in months to come.
Thursday, March 24, 2011
Lack of Enforcement Costs State $250 million
by Gary Snyder
Nonprofit Imperative constantly tells you that restitution is seldom discharged (3.2% is):
In a Michigan auditor general's report, the agency—the Department of Energy, Labor and Economic Growth—failed to collect tens of millions of dollars in overpayments and failed to assess and collect hundreds of millions of dollars in restitution and penalties for fraudulent claims. Rather than cutting off benefits immediately to claimants suspected of fraud, the agency continued to make payments while it referred the case to a fraud unit that had a one-year backlog. The audit found $72.5 million in overpayment of benefits and unassessed penalties of between $120 million and $236.6 million. In a response included with the audit, the agency attributed some of the problems to the huge caseload increase that resulted from the lengthy recession in Michigan.
Nonprofit Imperative constantly tells you that restitution is seldom discharged (3.2% is):
In a Michigan auditor general's report, the agency—the Department of Energy, Labor and Economic Growth—failed to collect tens of millions of dollars in overpayments and failed to assess and collect hundreds of millions of dollars in restitution and penalties for fraudulent claims. Rather than cutting off benefits immediately to claimants suspected of fraud, the agency continued to make payments while it referred the case to a fraud unit that had a one-year backlog. The audit found $72.5 million in overpayment of benefits and unassessed penalties of between $120 million and $236.6 million. In a response included with the audit, the agency attributed some of the problems to the huge caseload increase that resulted from the lengthy recession in Michigan.
Tuesday, March 22, 2011
What Took So Long?
by Gary Snyder
The board of trustees at the nonprofit MediSys Health Network fired its indicted chief executive. What took so long? The board acted this month when David Rosen was charged with bribing three politicians: the late Assemblyman Anthony Seminerio, State Sen. Carl Kruger and Assemblyman William Boyland Jr. Mr. Rosen has pleaded not guilty. They declined to suspend or fire Mr. Rosen after he was implicated in the bribery and corruption indictment of Mr. Seminerio in September 2008. Some board members' unusually close ties to Mr. Rosen may be the reason. There are four interrelated boards of trustees connected to the indicted executive—MediSys and Jamaica Hospital Medical Center—the system also includes Flushing and Brookdale hospitals. The boards have a higher-than-usual concentration of trustees who also work at the hospitals, making them dependent on Mr. Rosen for their paychecks. Others have been board members for decades.
The MediSys-related boards are unusual. Crain's New York noted one member, Queens restaurateur Anthony Federici, is described in media reports as a captain in the Genovese crime family. The boards include a notable number of doctors working at the system, including Brookdale's Dr. Alvin Kahn. He is listed in the hospital's 2009 tax forms as chairman under a section for trustees, directors and officers, with compensation of $307,412. Dr. Kahn is 82, and his salary has puzzled state officials, who believe that he is being paid for his role as trustee. Dr. Kahn's daughter also is on one of the four boards. Another board member, businessman Alex Rovt once offered to loan Brookdale money to meet its operating expenses. He asked for hospital real estate as collateral. The chairman of Mr. Rovt's company, Steven Plotnick, and one of its attorneys, Irina Benfeld, also are on MediSys-related boards. A former counsel, Margaret Johnson, claims that trustees “vote the way Rosen directs.” The trustees “are a mere alter ego of Rosen (and a few others).”
MediSys are the subject of a 2009 lawsuit by a former Brookdale general counsel who seeks $100 million in damages, alleging wrongful termination and claiming that conflicts of interests were rampant at the boards under Mr. Rosen's control.
Mr. Rosen, earned about $1.8 million in 2009 and two associates earned $1.4 million each.
The board of trustees at the nonprofit MediSys Health Network fired its indicted chief executive. What took so long? The board acted this month when David Rosen was charged with bribing three politicians: the late Assemblyman Anthony Seminerio, State Sen. Carl Kruger and Assemblyman William Boyland Jr. Mr. Rosen has pleaded not guilty. They declined to suspend or fire Mr. Rosen after he was implicated in the bribery and corruption indictment of Mr. Seminerio in September 2008. Some board members' unusually close ties to Mr. Rosen may be the reason. There are four interrelated boards of trustees connected to the indicted executive—MediSys and Jamaica Hospital Medical Center—the system also includes Flushing and Brookdale hospitals. The boards have a higher-than-usual concentration of trustees who also work at the hospitals, making them dependent on Mr. Rosen for their paychecks. Others have been board members for decades.
The MediSys-related boards are unusual. Crain's New York noted one member, Queens restaurateur Anthony Federici, is described in media reports as a captain in the Genovese crime family. The boards include a notable number of doctors working at the system, including Brookdale's Dr. Alvin Kahn. He is listed in the hospital's 2009 tax forms as chairman under a section for trustees, directors and officers, with compensation of $307,412. Dr. Kahn is 82, and his salary has puzzled state officials, who believe that he is being paid for his role as trustee. Dr. Kahn's daughter also is on one of the four boards. Another board member, businessman Alex Rovt once offered to loan Brookdale money to meet its operating expenses. He asked for hospital real estate as collateral. The chairman of Mr. Rovt's company, Steven Plotnick, and one of its attorneys, Irina Benfeld, also are on MediSys-related boards. A former counsel, Margaret Johnson, claims that trustees “vote the way Rosen directs.” The trustees “are a mere alter ego of Rosen (and a few others).”
MediSys are the subject of a 2009 lawsuit by a former Brookdale general counsel who seeks $100 million in damages, alleging wrongful termination and claiming that conflicts of interests were rampant at the boards under Mr. Rosen's control.
Mr. Rosen, earned about $1.8 million in 2009 and two associates earned $1.4 million each.
Wednesday, March 9, 2011
A Pastor: $2 million + Zoo, Church and Parishioner Fraud
by Gary Snyder
An evangelical pastor in Montreal, Canada whose ex-followers say he fleeced them of hundreds of thousands of dollars was arrested in connection with a nearly $1-million fraud case at a zoo. He faces fraud charges in connection with $978,000 allegedly diverted from Parc Safari Zoo from 2005 to 2008. He faces a string of lawsuits for unpaid bills, bounced checks and bad debts. Last July, a group of former church followers allege that he had talked them into loaning him cash - $142,000 in one case - and never paid them back. They said some members of the multiethnic congregation mortgaged their homes or borrowed with high interest credit cards to meet his requests for money. He is also charged with embezzling $734,734 over three years on behalf of Actions Bethel du Canada Inc., a charity based at the church.
An evangelical pastor in Montreal, Canada whose ex-followers say he fleeced them of hundreds of thousands of dollars was arrested in connection with a nearly $1-million fraud case at a zoo. He faces fraud charges in connection with $978,000 allegedly diverted from Parc Safari Zoo from 2005 to 2008. He faces a string of lawsuits for unpaid bills, bounced checks and bad debts. Last July, a group of former church followers allege that he had talked them into loaning him cash - $142,000 in one case - and never paid them back. They said some members of the multiethnic congregation mortgaged their homes or borrowed with high interest credit cards to meet his requests for money. He is also charged with embezzling $734,734 over three years on behalf of Actions Bethel du Canada Inc., a charity based at the church.
Wednesday, March 2, 2011
Such A Deal: Another Ripoff
by Gary Snyder
Cleve L. Killingsworth, who abruptly resigned last March as chief executive of the nonprofit Blue Cross Blue Shield of Massachusetts, collected $8.6 million in compensation from the state’s largest health insurer in 2010. The $8.6 million that Killingsworth, 58, took with him is a combination of the $273,040 salary he received for his 2 1/2 months at the insurer last year; a $922,480 bonus for his work in 2009; and $7.4 million in additional compensation, according to the regulatory filing. That additional money represents the severance and retirement payments that accrued over his six years at Blue Cross, including almost five years as chief executive.
To show the strength of its governance,in 2009,the health insurer's membership declined, its net income fell 49 percent, it laid off employees, and received of double-digit premium increases, Killingsworth was rewarded with a 26% increase in salary and bonus.
But this is a deal compared to his predecessor, William Van Faasen, who received $16.4 million in retirement benefits in 2006. Van Faasen, who took over again as acting chief executive after Killingsworth departed, is currently the company’s chairman. Can’t wait to see the remuneration for Van Faasen for his latest roles.
As is frequently the case, the state attorney general is monitoring compensation practices at health care companies and done nothing.
Cleve L. Killingsworth, who abruptly resigned last March as chief executive of the nonprofit Blue Cross Blue Shield of Massachusetts, collected $8.6 million in compensation from the state’s largest health insurer in 2010. The $8.6 million that Killingsworth, 58, took with him is a combination of the $273,040 salary he received for his 2 1/2 months at the insurer last year; a $922,480 bonus for his work in 2009; and $7.4 million in additional compensation, according to the regulatory filing. That additional money represents the severance and retirement payments that accrued over his six years at Blue Cross, including almost five years as chief executive.
To show the strength of its governance,in 2009,the health insurer's membership declined, its net income fell 49 percent, it laid off employees, and received of double-digit premium increases, Killingsworth was rewarded with a 26% increase in salary and bonus.
But this is a deal compared to his predecessor, William Van Faasen, who received $16.4 million in retirement benefits in 2006. Van Faasen, who took over again as acting chief executive after Killingsworth departed, is currently the company’s chairman. Can’t wait to see the remuneration for Van Faasen for his latest roles.
As is frequently the case, the state attorney general is monitoring compensation practices at health care companies and done nothing.
Subscribe to:
Posts (Atom)
Posts
