Mich. Gov. Snyder Defends Use Of Nonprofit Funds

Amid reports that his nonprofit paid for the living and travel expenses of a government official, Michigan Gov. Rick Snyder is saying that taxpayers should not be alarmed.

According to a report in Crain's Detroit Business, Snyder spoke out in defense of the New Energy to Reinvent and Diversify Fund (NERD), a foundation he started to promote various charitable causes. Various reports indicated that NERD paid $4,200 to cover Detroit Emergency Manager Kevyn Orr's stay at a hotel and that the fund is also paying for Orr's flights home to see his family in Maryland on the weekends.

When asked about whether taxpayers should be concerned about this at an event at the Michigan State University club, Snyder indicated that it was an appropriate use of the organization's money and that it was actually saving people money.

"We've been very clear it's all legal, it's all been presented, the information that's required," Snyder said. "It doesn't go to my personal benefit, it's actually offsetting costs of government, so people should feel comfortable with that."

NERD is registered as a social welfare, or 501(c)(4), organization, meaning that donors can contribute to the fund anonymously. Federal tax records show that the organization raised $368,000 in 2012, down from the $1.3 million it received in 2011. It had total expenses of $590,453 last year, compared with spending of $865,830 in 2011.

You can read the full story in Crain's Detroit Business.

9 Sobering Stats About Fraud

Every nonprofit manager knows that fraud is a bad thing but too many operate under the belief that it can never happen to them. It's that attitude that can lead to fraud occurring in the first place.

Managers can’t eliminate human weakness, but they can be vigilant in preventing fraud or, if necessary, dealing with it right away. Further, prevention can be helped in part by awareness throughout the organization.

During the recent AICPA Not-for-Profit Industry Conference, Mitchell Lewis, David McRoberts and William Mellon shared several statistics regarding fraud, taken from the Association of Fraud Examiners 2012 Global Fraud Survey (which includes for-profits). Get ready to be demoralized:

• Asset misappropriation schemes made up 87 percent of reported cases.
• The typical organization loses 5 percent to fraud each year.
• Reported frauds last approximately 18 months before detection.
• Some 77 percent of frauds were committed by individuals in one of the following six departments: accounting, operations, sales, executive/upper management, customer service, purchasing.
• Owners/executives and managers committed median losses at $573,000 and $180,000, respectively.
• The median loss caused by occupational fraud was $140,000.
• Median losses for nonprofits totaled $100,000.
• Approximately 85 percent of fraudsters are first-time offenders.
• Approximately 54 percent of fraudsters were between the ages of 31 and 45.

Nonprofit, Founder Ordered To Pay Employee After Racist Rant

A federal jury in New York ruled that a nonprofit and its founder must pay a former employee $280,000 after she was subjected to a rant using racial slurs.

According to a report on CNN.com, the ruling stems from a lawsuit filed by Brandi Johnson against STRIVE, an employment center in East Harlem section of Manhattan. Johnson claimed in her suit that STRIVE’s founder, Rob Carmona, repeatedly harassed her, culminating in a rant that used slurs against African-Americans. Johnson, who is black, said in court that the incident was the last straw for her. She sent a formal complaint to the organization’s CEO, Phil Weinberg on April 11, 2012 but was allegedly told that she was being "out of line" and "emotional."

Johnson was fired two months later, which she alleges was done as retaliation for her complaints.

The jury ruled Tuesday that Carmona, who founded STRIVE in 1984, must pay Johnson $25,000 and the organization must contribute $5,000 in punitive damages. This comes a week after jurors awarded Johnson $250,000 in compensatory damages.

"We are disappointed by the verdict, as we do not believe that it comports with the full facts applicable to the case," said Carmona's lawyer, Diane Krebs, via a statement. "Nevertheless, we respect the jury's decision and the judicial process. We are exploring all our options moving forward, including appeal, and look forward to the judicial process taking its entire course."

While testifying last Friday Carmona, who identifies as black and Hispanic, tearfully tried to explain his actions. He explained, "I come from a different time." According to STRIVE, Carmona spent his early teenage years in Harlem addicted to drugs and in and out of prison. He found solace in an alternative incarceration program where he cleaned up and eventually attended college. The center's website says that it has helped nearly 50,000 individuals across America enter the workforce.

For her part, Marjorie Sharpe, Johnson's attorney, called the decision "important" because it is the first case where "we essentially have the n-word on trial."

"There are a number of cases where the n-word has been used in a workplace, but usually it's been done between people of different races, and when we're having that discussion, it seems that it's clear that if you're not African-American and you use the n-word, absolutely it's insulting," continued Sharpe.

You can read the full story on CNN's website.

11 Tips To Limit Fraud At Your Nonprofit

Unless someone develops a way to stop humans from having feelings of greed, nonprofit leaders are going to have to continue to be vigilant about fraud prevention. At a recent AICPA Not-for-Profit Industry Conference, the best ways to do this were discussed.

At the conference, Mitchell Lewis, David McRoberts and William Mellon said that while it is nearly impossible to stop fraud, there are ways to reduce the chances it will happen to you and to limit the damages if it does. They said that one of the main causes of fraud is a work environment where lack of oversight and too much trust are rampant.

With that in mind, Lewis, McRoberts, and Mellon offered five suggestions for organizations to practice:

• Fraud governance structure, including tone at the top, a zero tolerance policy, documented fraud policy statement and a code of ethical behavior.
• Regular education and training.
• A fraud tip line.
• Completion of a fraud assessment to identify fraud exposures and related events that require mitigation.
• An investigation and response reporting process.

In terms of specific anti-fraud controls, they suggested:

• Vendor bidding process;
• Completion of background and reference checks;
• Dual signatures and levels of approval;
• Segregation of duties;
• Mandatory vacations; and,
• Internal audits and use of Computer Assisted Audit Techniques (CAATs).

Queens Nonprofit Head Pleads Guilty To Stealing Funds

The head of a nonprofit youth camp in Queens, N.Y. pleaded guilty Tuesday to stealing hundreds of thousands of dollars in funds allocated by state lawmakers.

Van Holmes, president of the Young Leaders Institute Inc., was arrested on July 16th on charges that he misused $850,000 in member items that were set aside for the organization over several years. According to a report in The Times Ledger, Holmes claimed he would use the money to take campers on trips to Wall Street and Albany, but prosecutors allege that he used nearly $77,000 of the funds to pay employees of an after-school programs he ran.

Holmes has agreed to pay back tens of thousands of dollars to the state.

“Today’s plea and sentencing are an appropriate punishment for the crimes committed against the taxpayers of New York and the children for whom these funds were intended,” said state Attorney General Eric Schneiderman and Comptroller Thomas DiNapoli in a join statement. “We thank the Department of Investigation, as well as staff in both the attorney general’s and comptroller’s offices, for their diligent work and a successful outcome in this case.”

A large portion of the grants that Holmes received came from then-State Sen. Shirley Huntley (D-Queens), who allocated almost $80,000 in funds for Young Leaders Institute. Huntley plead guilty earlier this year to embezzling $88,000 from the Parents Workshop, an education nonprofit she helped create. Her case is not related to Holmes', authorities said.

You can read the full story in The Times Ledger.

Housing Nonprofit Investigated Over Use Of Federal Funds

The United States Attorney's office is conducting an investigation to determine whether a now-defunct Portsmouth, Va.-based housing nonprofit misused hundreds of thousands of dollars in federal funds.

The organization, the Center for Community Development Inc., (CCDI) had worked in Portsmouth since 1990 to help renovate and provide homes to the needy. Bill Price, a spokesman for the Commonwealth's Attorney Earle Mobley, told The Virginian-Pilot that investigators were concerned about that amount of money that was used by the nonprofit.

“Based on the amount of money and that a significant portion was federal money, we asked the federal authorities to review it,” said Price.

The Center used $313,000 in federal funds from Portsmouth to renovate three properties, funds that the city eventually had to repay to the U.S. Department of Housing and Urban Development because the projects weren’t completed under the federal HOME program. In addition to the $313,000, CCDI received $256,000 from the city council between November 2011 and December 2012.

CCDI closed in February 2012 and the Internal Revenue Service had put about $43,000 in tax liens on at least one of its properties.

For his part, CCDI founder Maury Cooke said Monday that the group's executive director, Bruce AsBerry, had requested a federal investigation into Portsmouth's money-lending practices and that he believes the organization is a victim of racial discrimination.

You can read the full story in The Virginian-Pilot.

Ex-Nonprofit Director Sentenced

The ex-director of a nonprofit in Sanford, Maine was sentenced Tuesday to 2 1/2 years in prison for stealing more than $900,000 from the organization over six years. He was also ordered to pay $1.35 million in restitution and will report to prison on June 18.

According to a report in the Portland Press Herald, Thomas Nelson embezzled the money from York County Community Action (YCCA) from 2004 until his resignation in 2010. The organization provides services for low-income women and children.

Nelson's attorney, Jeffrey Silverstein, said that his client stole the money to fuel his gambling addiction, a habit he has since stopped. Nelson apologized for his actions in court, saying he let down YCCA.

"They trusted me, treated me well and I let them down."

Nelson transferred the money he stole from YCCA to a consulting firm outside Maine that returned part of the money in cash or payments toward his personal finances, according to court records. He continued to work for other nonprofits after he left YCCA in 2010, working as an executive director for Rockingham County Community Action in New Hampshire until, when faced with charges of embezzlement, he pleaded guilty in 2012.

The U.S. Attorney's Office recommended a reduced prison sentence for Nelson since he cooperated fully with investigators. Judge Nancy Torresen accepted this recommendation for this reason and because she wanted Nelson to return to the workforce quickly so he could repay his debt.

"From my point of view, you stole money from people who could least afford to lose it," Torresen told Nelson. "I consider this crime shameful."

In a written statement, Barbara Crider, YCCA's current executive director, thanked the U.S. Attorney's Office for their efforts and said that no program funds were taken as a result of Nelson's actions, and that services were not interrupted. The organization has also recovered a significant amount of the lost funds from its insurance bond.

You can read the full story in the Portland Press Herald.

Former Treasurer Faces Theft Charges

The former treasurer of a Tallahassee, Fl.-based nonprofit is being charged with stealing more than 90,000 from the organization.

According to a report on Tallahassee.com, Jamie Pitts was arrested Wednesday after investigators discovered she allegedly wrote checks to herself from the nonprofit for she worked, Child Advocates II, over two years. The organization obtains its donations from Guardian Ad Litem, a group that serves Florida's abused and neglected children.

Authorities allege that Pitts, who had sole access the nonprofit's account, deposited the 159 checks totaling more than $90,000 into her personal bank account. She allegedly represented the checks as expense reimbursements most of which she listed as "voided" when she presented financial statements to Child Advocates' board. The checks were reportedly written starting in August 2010 and ending on April 27, 2012.

Brad Sealey, chair of the board, first discovered the alleged theft in March when he discovered the organization's account had a negative balance. When he was able to gain access to the account by proving he was the chair of Child Advocates' board, he discovered Pitts' alleged actions.

In a sworn statement, Sealey said that the organization's bylaws state that any reimbursements must be approved by a resolution of the board, and that no such resolutions were ever made to reimburse Pitts.

Pitts faces charges of grand theft and organized scheme to defraud. You can read the full story on Tallahassee.com.

Two Men Charged In Alleged 9/11 Charity Scam

Two men have been indicted for allegedly operating a bogus 9/11 charity, New Jersey Attorney General Jeffrey S. Chiesa announced today.

Mark Niemczyk and Thomas Scalgione were indicted Friday on third-degree charges of conspiracy and theft by deception. The two men operated a pick-up truck from which they operated a charity that was supposed to raise money for the victims of the 9/11 attacks or related charities. The men allegedly sold t-shirts and collected donation at 9/11 events. The funds they raised -- in excess of $50,000 -- never made it to victims' families or 9/11 charities as promised, according to Chiesa.

“It’s a sad reality that in the wake of a devastating tragedy, when so many want to help, there are always parasites who view the tragedy and the generosity of others as nothing more than the opportunity and the means to turn a crooked profit for themselves,” said Chiesa.

The state alleges that Niemczyk and Scalgione, who registered their operation with the state, took all of their proceeds and deposited it into their personal bank accounts to pay for unrelated expenses. As a result of their alleged fraud, the two men were able to purchase the t-shirts they sold at a discounted rate by telling vendors that the proceeds from their sales would benefit victims' families. One vendor gave discounts totaling $3,312, and another gave discounts totaling $1,378.

Elie Honig, director of the New Jersey Division of Criminal Justice, also alleges that the men told other lies in the name of donations. Niemczyk allegedly claimed that he was a Navy SEAL who did three tours of duty in Vietnam, and that he and Scalgione were father-and-son firefighters who were working at a firehouse near the World Trade Center on 9/11.

“Their conduct was outrageous, and we urge any victims who donated money or bought T-shirts from these con artists to contact us,” said Honig.

The charges against Niemczyk and Scaligione stem from an investigation by the Division of Criminal Justice Financial & Computer Crimes Bureau. The criminal investigation began with a referral from the Division of Consumer Affairs, which in November secured a final consent judgment in a civil action, under which the men must pay a total of more than $200,000, representing disgorgement of donations and payment of civil penalties, attorneys’ fees and investigative costs. The judgment bars the men from ever working for any charitable organization in New Jersey should they be convicted.

You can read the full indictment on the state of New Jersey's website.

Report: Nonprofit Used State Funds For Perks

A nonprofit funded by the state of New York is being accused of paying for excessive executive perks, according to a report issued by the office of state Comptroller Thomas DiNapoli. The findings are now being referred to U.S. Attorney Preet Bharara's office for review.

Phoenix Houses of New York, which operates a number of residential and outpatient rehab programs in New York City, Long Island, and upstate New York, is alleged to have provided $223,000 worth of inappropriate perks while under contract with the Office of Alcoholism and Substance Abuse Services (OASAS). This includes allegedly paying $91,050 for executive bonuses, $40,447 for fringe benefits, and $35,996 for vehicle leases from July 2009 to June 2010.

The report also alleges that Phoenix Houses failed to report $290,000 in Medicaid revenue to OSASAS which would have reduced the amount the agency's payments to the nonprofit.

"This was money intended to treat people struggling with substance and gambling addiction, not to subsidize unwarranted perks for high-salaried executives," DiNapoli said. "My office will work closely with U.S. Attorney Bharara's office to ensure that those abusing the public trust are held accountable."

Auditors and investigators also discovered that one employee allegedly made $4,000 in "improper" purchases of Wal-Mart gift cards used for alcohol, cigarettes, and other inappropriate items. The employee allegedly covered up these purchase by submitting falsified receipts.

Based on the finding, DiNapoli recommends that OASAS should strengthen controls to monitor Phoenix Houses' contract compliance, recover the alleged improper funds, and recover executive overpayments if they are determined to not be justified.

A call to Phoenix House for comment was not immediately returned.

You can read the full report on state Comptroller's Office website.

Scams Abound After Boston Marathon Bombings

In the aftermath of the deadly bombings Monday at the Boston Marathon, a number of web sites claiming to offer funds for victims appear to be scams.

According to the Internet news site TheDomains, more than 20 of the 125 domains that were registered after the bombings appear to be illegitimate. Michael Berkens, editor of TheDomains, wrote in his piece that many of these sites, such as Bostonmarathonrelief.com, have been registered by individuals rather than legitimate charities.

“While we don’t know every registrants' intention, we do know historically that many of the domain names registered immediately after were done to get traffic and make money parking domains or worse,” wrote Berkens.

Bostonmarathonrelief.com claims to be raising $25,000 benefiting the American Red Cross (ARC). As of this writing, $20 has been donated. A spokeswoman for ARC told The NonProfit Times that the site is in no way affiliated with the organization. The site is registered to a man in Fort Worth, Tex.

Scams also appeared on social networking platforms. Shortly after the bombings, a Twitter handle  masquerading as an official account of the Boston Marathon sent out a tweet claiming it would donate $1 to victims for every retweet. The account, @_BostonMarathon, was suspended by Twitter, according to The Huffington Post.

“Tragedies inspire people to give,” H. Art Taylor, president and CEO of Better Business Bureaus Wise Giving Alliance, said in a press release, “but, tragedies –- whether natural disasters or manmade catastrophes –- also inspire scammers to take advantage of that generosity. Social media, in particular, makes it very easy to reach a lot of people quickly, when emotions are running high and people feel the need to take action, any action, to help.”

Charity scams after national tragedies are not exactly a new phenomenon. After the Newtown, Conn., shootings resulted in the death of six-year old Noah Ponzer, an e-mail was sent to individuals asking for donations that would be sent to Ponzer's family. Upon learning of the bogus solicitations, Ponzer's uncle alerted authorities who put an end to the scam.

Khloe Kardashian: Husband's Charity Not A Scam

Reality star Khloe Kardashian has taken to the web to deny allegations that her husband Lamar Odom's charity is a scam.

A report on ESPN's "Outside the Lines" program on March 31 alleged that many charities of top athletes don't fulfill their missions as stated. They cited Odom's charity Cathy's Kids as one of the examples, alleging that the organization hasn't given any money to cancer research even though it has raised nearly $2.2 million.

The charity was founded by Odom in 2004 and was named after the NBA star's mother who died from cancer. ESPN noted that the charity was supposed to raise funds for cancer research, but the report alleged that nearly 60 percent of donations has gone to finance two elite youth basketball travel teams and that there is no evidence that any of the remaining $900,000 went to cancer research.

The Huffington Post reported that on Tuesday, Kardashian took to her blog on the website Celebuzz to defend her husband from the allegations. She insisted that the Los Angeles Clippers star has personally donated "millions" of dollars to cancer research, and that none of the money from the charity went to help him or any member of his family.

She also sought to clarify the ultimate mission of Cathy's Kids, saying that the organization was founded with multiple purposes in mind including cancer research and helping underprivileged youth. "A decision was ultimately made that the charity should focus on one of those purposes — to help enrich the lives of underprivileged inner-city youth," wrote Kardashian. "It accomplished that goal. Cathy’s Kids helped fund multiple AAU basketball teams providing underprivileged youth with opportunities enriching their lives, providing financial support for coaching and travel to tournaments, helping inner-city youth on a path toward success and leading many participants to go on to college."

Aside from Odom's charity, the ESPN report also mentions alleged questionable practices by such well-known athletes as New York Yankees third baseman Alex Rodriguez, whose foundation stopped filing tax returns five years ago, and NFL wide receiver Randy Moss, whose two charities allegedly spent no money on philanthropy in 2010.

Texas AG Investigating Cancer Foundation

Texas Attorney General Greg Abbott has reportedly launched an investigation into the nonprofit arm of the Cancer Prevention and Research Institute of Texas (CPRIT) in an effort to determine what is happening to the money it has raised.

According to a report in The Austin American Statesman, the Abbott's office sent a letter to the CPRIT Foundation, now known as the Texas Cancer Coalition (TCC), on Friday to request that the organization cease all expenditures until the investigation is complete.

“Based on the preliminary information available to us at this time, we have serious legal concerns about the events that reportedly surrounded the formation of the TCC,” wrote G. David Whitley, the assistant deputy attorney general, in the letter.

TCC raised nearly $3.6 million over three years to supplement the six-figure salaries of CPRIT's top two executives and for conferences to fight cancer. The Foundation, however, was swept up in the ethical questions surrounding CPRIT. The state agency is being investigated by state prosecutors for allegedly mismanaging at least $56 million in grants. The investigation began after it was disclosed that CPRIT allegedly awarded an $11 million grant to a Dallas-base startup without any scientific or business review.

Abbott's office set its sights on TCC after it changed its name and mission. The attorney general believes the Foundation needed state authorization to make such a change. Craig Enoch, a lawyer for TCC, wrote in a response to Whitley's letter that state authorization was not necessary and that TCC leadership had discussed the potential change for months.

“The Foundation, in fact, is unaware of any authority requiring it to seek the Attorney General’s approval were it to actually dissolve and transfer its assets to another private charity with a similar mission,” wrote Enoch.

In terms of the funds raised, TCC spokesman Marc Palazzo told The Statesman that the money would be returned to the state once the organization pays its bills.

You can read the full story in The Austin American Statesman.

Did A California Nonprofit Receive Special Treatment?

The assistant general manager of the San Francisco Public Utilities Commission (PUC) is under investigation to determine her alleged role in awarding a $20,000 no-bid contract to a nonprofit she once chaired.

According to The San Francisco Chronicle, Juliet Ellis earns $195,000 a year for her role at the Commission. Her main job is to figure out how to implement PUC's new policies regarding environmental justice and community benefits. Ellis was formerly chair of the Oakland-based nonprofit Green for All, according to 2012 financial-disclosure documents filed with the city of San Francisco, and this has raised questions about what role she played in approving the July contract for the organization.

PUC guidelines state that administrators are allowed to take on outside work so long as they have special permission and on the condition that there is no conflict of interest.

While Ellis reportedly assured her superiors at PUC that she had no role in the approval of the contract, but an investigation by The Chronicle casts some doubt on that claim. An insider at PUC reportedly told the publication that Ellis was involved in almost every discussion regarding Green for All, and worked with them to "develop the scope of work."

PUC has suspended the Green for All contract indefinitely until the investigation by authorities is complete.

You can read the full story in The San Francisco Chronicle.

Oregon Nonprofit Sued Over Book Publishing

A nonprofit online library based in Oregon is being sued by Penguin Publishing for allegedly posting entire books online of which the company holds exclusive rights.

The publishing giant filed the suit on Friday, seeking an injunction and damages against American Buddha Library, according to The Oregonian. The brief alleges that the nonprofit posted to the web such novels as Upton Sinclair's "Oil!" and "It Can't Happen Here" by Sinclair Lewis. The publishes also accused the organization of misusing new translations of "The Golden Ass" by Apuleius, and "On the Nature of the Universe" by Lucretius.

The suit alleges that Penguin discovered the postings in December 2008 and immediately notified the nonprofit of the alleged copyright infringement. The company then filed an infringement suit against American Buddha in a New York federal court, which ruled that it lacked jurisdiction over the nonprofit.

American Buddha's website notes that it "makes available selected artistic and literary works under a system of voluntary, free online lending, under the fair use exclusion from copyright liability accorded to libraries and archives," and used that defense in response to Penguin's suit. The organization also claims that, by using its site, users agree not to violate copyrights "by piratical behavior."

You can read the full story in The Oregonian.

Nonprofit Administrator Sentenced In Theft Case

The former administrator of a nonprofit in Prince George's County, Md., was sentenced to four and a half years in prison Monday on charges that she stole thousands of dollars from the organization.

According to a report on Gazette.net, Penny Parker Green was charged with leading a scheme to steal $166,137 from the Arc of Prince George's County and 72 group home residents between November 2006 and February 2012. During those dates, she allegedly used the company credit card to purchase a flight for an Aruba vacation, install custom closets in her home and purchase computers, electronics, furniture and other merchandise and services.

U.S. prosecutors also charged that Green instructed employees to withdraw cash from residents' bank accounts for her personal use.

Green worked as an administrator at The Arc for 13 years, according to staff at the organization, and made an annual salary of $95,000. Arc Executive Director Mac Ramsey told Gazette.net that Green first was suspected of wrongdoing when he learned that she allegedly lied about having her master's and doctorate degrees, even though those were not requirements for the job. Since the incident, Ramsey said, the organization has reviewed it security practices and closed some loopholes to ensure something like this never happens again.

Green eventually was arrested on May 23 on charges of wire fraud.

U.S. District Court Judge Alexander Williams Jr., also sentenced Green to three years of supervised release and ordered her to pay the Arc $166,137. She was made to forfeit the items she purchased with the company credit card.

You can read the full story on Gazette.net.

Ex-Nonprofit Director Sues Indiana Mayor

The former head of a nonprofit in Hammond, Ind., has filed a suit against the city's mayor and the organization over allegations that she was wrongfully fired.

According to a report in the NWI Times, Carlotta Blake-King alleged that the defendants -- including Mayor Thomas McDermott Jr., City Councilman Anthony Higgs, and United Neighborhoods, Inc. (UNI) -- conspired to remove her from her position as director at UNI in retaliation for her candidacy for City Council.

Blake-King ran an unsuccessful campaign against Councilman Higgs in 2011, whom Mayor McDermott supported.

For his part, McDermott said in a statement Monday that Blake-King's allegations are "completely untrue," and that her firing was due to her "unsatisfactory" performance as director of the nonprofit agency, which is partially funded by the city's Department of Planning and Development.

According to the complaint filed by Blake-King, she was fired after an alleged "special meeting" of UNI's Board of Directors, where she was allegedly "berated" by Phil Taillon, executive director of the Department of Planning and Development, over her character and performance. The complaint also alleges that Nicole Bennet, an attorney, stated during that same meeting that Blake-King's candidacy for office while holding the position of director violated a federal act that bars certain employees from taking part in partisan politics.

Blake-King, through her lawsuit, is seeking the wages and benefits she would have earned had she not been fired from UNI.

You can read the full story in the NWI Times.

Obama Nonprofit Says Donors Can't Buy Access

Donors to the nonprofit version of President Barack Obama's successful campaign apparatus will not be able to buy their way to special access to the president, according a spokeswoman for the organization.

It was announced weeks ago that Obama's campaign organization would be re-launched as a nonprofit, called Organizing For Action (OFA), and that the group would advocate for the president's second-term agenda by connecting with supporters. Since then, there have been whispers that donors who raised or gave more than $500,000 to the group would be invited to have face-to-face meetings with President Obama.

Those reports were strongly pushed back by both the White House and OFA. In an article in The Washington Post, OFA spokeswoman Katie Hogan is quoted as saying "No one has been promised access to the president." In addition, White House spokesman Jay Carney said in a press briefing Monday that there was not a "price tag" for meeting the president. He did not, however, directly address whether high-priced donors would be invited to quarterly meetings with Obama.

“Administration officials routinely interact with outside advocacy organizations,” Carney said. “This has been true in prior administrations and it is true in this one.” In both presidential campaigns, Obama has spoken out against the influence of money in politics.

Sources with knowledge of OFA's plans told The Post that the organization has plans to raise millions of dollars. Those same sources said that OFA officials have reached out to 50 top Obama donors who intend to raise $500,000 or more this year to support the president's agenda. Many of these donors previously served on the Obama campaign's National Finance Committee, and they will undoubtedly expect some perks for shelling out huge sums of cash. Yet, according to the report, an explicit menu of benefits were not given to the donors.

During the 2012 campaign, high-value donors were offered perks such as a chance to talk politics with Obama for 25 donors who bought a $35,800 ticket to a luncheon in San Francisco.

Two top OFA officials, Jim Messina and Jon Carson, have been meeting with top Obama fundraisers in recent weeks to discuss the group's agenda and to get financial support. Top donors who are willing to raise $50,000 have already been invited to attend a March 13 "founder's summit" in Washington, D.C.

You can read the full article in The Washington Post.

Gates-Backed Charity Targeted In Embezzlement Probe

Twenty doctors with ties to a charity backed by the Bill and Melinda Gates Foundation were arrested over the weekend in Niger for suspected embezzlement of funds.

According to an article on The Huffington Post, the arrests are part of an investigation of some $1.5 million in funds donated by the GAVI Alliance between 2007 and 2010. The arrested doctors were charged with allegedly embezzling these funds from the organization, which has reportedly suspended the financing of health programs in Niger until the money is reimbursed.

The Washington, D.C.-based GAVI Alliance, which was founded in 2000 with help from a $750 million grant from the Gates Foundation, aims to improve access to immunization in the world's poorest countries. The organization also receives support from the World Bank, UNICEF, and donor governments.

The landlocked West African country has made fighting corruption a priority in recent years. In 2011, President Mahamadou Issoufou fired two ministers who allegedly awarded illegal state contracts.

This is not the first time the Alliance has faced financial controversy. In December, the nonprofit suspended $6 million in funding to another African country, Sierra Leone, after an audit revealed misuse of $1.1 million in previously disbursed funds. The report showed undocumented expenses, cash handouts, and overcharged procurement costs between 2008 and 2011.

You can read the full story on The Huffington Post.

Sandy Relief Group Sued For Fraud

The founders of a Hurricane Sandy relief group have been sued by the state of New Jersey for allegedly diverting funds for personal use, while victims of the storm supposedly received little money.

John Sandberg and Christina Terracino founded the Hurricane Sandy Relief Foundation (HSRF) in the aftermath of the deadly super storm to help those affected by it. On Thursday, the state Attorney General's Office and the New Jersey Department of Consumer Affairs (DCA) filed a lawsuit against the two founders and the Foundation. According to a report in The Asbury Park Press, the suit cites numerous violations of NJ's charity code, including allegedly diverting $17,000 in donated funds to, among other things, pay credit card bills and shop online.

“This organization told the state it does not pay its executives, but our investigators found a paper trail reflecting thousands of dollars being transferred into the individual defendants’ personal bank accounts,” said Attorney General Jeffrey S. Chiesa in a prepared statement. “Meanwhile, less than one percent [$1,650] of the money raised, has allegedly been paid out to help the victims of Sandy.”

According to the Foundation's website, almost $631,000 in cash donations were raised. The state's complaint alleges that nearly $39,000 of that money remains missing.

Other accusations against Sandberg and Terracino include, allegedly:

• Misleading donors by falsely claiming the Foundation is a tax-exempt 501(c)(3) charity; and,
• Co-opting the name of the Hurricane Sandy New Jersey Relief Fund, which was founded by NJ First Lady Mary Pat Christie.

You can read the full story in The Asbury Park Press.