Russia: Nonprofits Violated 'Foreign Agent' Law

Russian prosecutors announced Tuesday that 215 nonprofits working in the country have violated a recently passed law that places heavy restrictions on outside organizations.

Russia passed a law in November that, among other restrictions, requires organizations to register as "foreign agents" if they receive financing from overseas and are deemed to be engaging in political activities. According to a report in The New York Times, Yuri Chaika, Russia's general prosecutor, said that the 215 organizations named in his report received 6 billion rubles, or about $180 million, over a period of three years yet had violated various aspects of the law.

He noted that 22 of the groups continued to use overseas funds, which is forbidden by the law, while an additional 17 received funding through foreign embassies.

Russian President Vladimir Putin has repeatedly accused foreign governments of using nonprofits to disrupt the country's political system but, in a statement on Tuesday, suggested Chaika show the groups some leniency.

“Analyze this practice to avoid errors and to see if any organization has been rated as a foreign agent, although it does not engage in politics,” he said, according to the news agency Interfax, The Times reported.

You can read the full story in The New York Times.

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.

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 Manager Arrested On Theft Charges

The manager of a property operated by a nonprofit in Tallahassee, Fl., has been arrested on charges that she allegedly stole rent payments from tenants.

Latangee Hart, 45, turned herself in last Friday and was released on bail the same day, according to a report in The Tallahassee Democrat. She faces a charge of grand theft for allegedly depositing rent paid in cash and money orders into her personal bank account. The property in question, the Maryland Oaks Crossing housing campus, is operated by Good News Outreach, a Christian faith-based nonprofit. The property contains 48 rent-subsidized homes.

Brendan Popp, interim director at the organization, told The Democrat that no other employee was involved, and that policies were being put into place to prevent future incidents of this nature.

Police were tipped off to Hart's actions after a tenant complained in August that his rent payments were not being applied to his account. The property supervisor, Ed Laurienzo, investigated the complaint and found there were multiple rent payment discrepancies and that Hart was keeping poor records of payments. She was eventually fired on Aug. 17, four days after the initial complaint.

An audit later found that a bank account where Hart was allegedly keeping the money. Most of the payments were money orders with the "pay to the order of" portion left blank, where Hart, according to the charges against her, would fill in her name.

You can read the full story in The Tallahassee Democrat.

Ex-Nonprofit CFO Sentenced

The former Chief Financial Officer (CFO) of a nonprofit in Metairie, La., has been sentenced to two years in prison after being convicted of embezzling nearly $25,000 from the organization and a company employee.

Kelley Williams was also ordered to pay $245,386 in restitution by U.S. District Judge Martin L.C. Feldman, according to a report in The San Francisco Chronicle. The 38-year-old Williams must also serve three years of supervised release following her prison term.

Federal prosecutors charged Williams with forging the name of the nonprofit's president on checks she made payable to herself, which were then deposited into her bank account. She attempted to disguise these payments by making use of computer accounting software, prosecutors say.

While the name of Williams' former employer is not identified in court papers, it was revealed that the organization provides personal care attendants, transportation, and training to individuals with developmental disabilities.

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

Ariz. Group Ordered To Release Donation Records (UPDATED)

Gov. Jerry Brown (D-Calif.)

UPDATE: The Los Angeles Times has reported that Americans for Responsible Leadership has released the names of its contributors. The release identified the nonprofit Americans for Job Security as the organization behind the $11-million donation. That money was then passed to Center to Protect Patients Rights to ARL.

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The California Supreme Court ruled Sunday that a Phoenix, Ariz.-based Political Action Committee (PAC) had to release its donation records to state records.

The state's highest court made the 7-0 ruling on a rare Sunday conference call, ordering Americans for Responsible Leadership (ARL) turn over records relating to an $11-million donation to a business campaign that opposed two propositions by Gov. Jerry Brown. The court ruled that ARL had to submit the records to the Fair Political Practices Commission (FPPC) an hour after their ruling, according to The Sacramento Bee.

As of this writing, however, ARL has yet to submit the records, having already unsuccessfully attempted to get the court to extend the deadline to 9 a.m. local time today. Matt Ross, a spokesman for ARL's legal time, said in a written statement to The Sacramento Bee that "While we are working to deliver the records, we still believe that the FPPC does not have the authority to take such action and have filed a request for immediate stay with the United States Supreme Court."

That letter was sent to Justice Anthony Kennedy, who wrote the majority opinion in the controversial Citizens United case, which focused on campaign spending by corporations and nonprofits. In the letter, attorney Thad A. Davis wrote that the FPPC was unfairly targeting ARL because it was targeting Brown's initiatives.

For its part, the FPPC wants to review the donations records to determine whether ARL violated state rules that require nonprofits to disclose the names of its donors if their money was earmarked for a specific initiative. Depending on when they receive the records from the group, it remains to be seen whether the FPPC has enough time to make ARL disclose the names of its donors if a violation is found.

The NonProfit Times blog first reported on this story last week when a judge from the Sacramento Superior Court ruled that the FPPC could investigate ARL's donation records. That decision was eventually appealed to the California Supreme Court.

PTA Sues For-Profit Rival

The National Parent Teacher Association (PTA) filed a lawsuit against one of its for-profit rivals, accusing it of attempting to steal its members.

According to a report on CBS News, the Chicago-based PTA filed the suit Wednesday in a U.S. District Court in Chicago against PTO Today. The organization claims that PTO engaged in trademark infringement, false advertising, and deceptive trade practices in attempts to siphon its members. Once boasting 12 million members during its prime, the PTA has seen its membership reduce by half that.

In a statement posted on it's website, PTA president Betsy Landers said that School Family Media, PTO Today's parent company, attempted to confuse the public into thinking the company had a relationship with the PTA in order to get advertising for their website and magazine.

"PTA has no issue with any for-profit company that wants to provide products and services to PTA and its members," said Landers in the statement. "However, we do strenuously object to School Family Media inferring it has a relationship with PTA that does not exist and, at the same time, disparaging PTA to drive business their way."

The suit also accuses PTO Today and School Family Media of making false statements about the PTA.

PTO Today founder and CEO Tim Sullivan denied the accusations, telling The Associated Press that PTA's membership started to decline before his company was in existence. PTO Today was founded in 1999, and it offers insurance, resource kits, training, and other advice to independent parent-teacher organizations.

You can read the full story on CBS News' website.

Settlement Reached In Law Enforcement Nonprofit Lawsuit

A settlement was reached in a lawsuit Tuesday, setting the stage for a Texas law enforcement nonprofit's assets to be liquidated.

The Austin American-Statesman reported that the lawsuit, which was first filed in December 2011, alleged that the Texas Highway Patrol Association (THPA) in Austin defrauded consumers and misused contributions. Specifically, the group was accused of illegally soliciting charitable donations, and falsely claiming that they would be used to benefit the families of fallen state troopers.

A state investigation alleged that few individuals received this assistance, and that the THPA used up to $10,000 in donations a day to buy tickets to amusement parks, movie theaters, and to pay for airfare.

After the lawsuit was filed, Travis County Probate Judge Guy Herman ordered the organizations assets frozen at $490,000. Now, as part of the settlement, the assets at THPA and a museum it operates in San Antonio will be liquidated. The proceeds from the sales will go to the family members who claimed to have never received the financial assistance they were promised.

The settlement also fines THPA up to $2 million and forbids several of the nonprofit's leaders, including former state Rep. Lane Denton (D-Waco), from being involved with nonprofit or for-profit related to law enforcement.

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

$6.1 Million Damage Awarded In Defamation Case

A Texas District Court judge ruled that a former intern defamed a bat sanctuary nonprofit and its president, and awarded the organization $6.1 million in damages.

After a four-day trial, Judge William Brigham found that Mary Cummins had committed defamation against Bat World Sanctuary president Amanda Lollar and breached her internship contract with the organization. She was ordered to pay $3.0 million in punitive damages, $10,000 for her breach of contract, and $176,000 in attorney’s fees.

Cummins was accepted for an internship at the Mineral Wells, Texas, organization in 2010, but left early after becoming dissatisfied with the program. Lollar and her attorneys then claim she went back to her home in California posted allegations of animal cruelty against her and the organization on the Internet.

“This judgment sends a powerful message to cyber-stalkers and others who use the Internet to harass people or to harm their reputations,” said Randy Turner, Lollar’s attorney. “Innocent victims like Amanda Lollar often don’t have the resources, expertise, or ability to defend themselves against such vicious Internet attacks. Hopefully this judgment will make someone think twice before engaging in an Internet smear campaign.”

Among many allegations, Cummins accused Lollar of performing surgeries on bats without anesthesia, possessing and distributing controlled substances without a license, and throwing dead bats in the trash. Along with posting these complaints on the Internet, she also filed numerous complaints with animal cruelty organizations, including a foundation that had been funding Bat World Sanctuary but stopped doing so after receiving the complaints. Every agency that Cummins filed complaints with eventually found them to be without merit after further investigation.

“I would like to thank everyone who stood by us during this ordeal and never, ever lost faith in us,” Lollar said via a statement. “Mr. Turner and his paralegal, Kelly Bozeman, worked tirelessly for us and we couldn’t have won without them. I will be forever grateful.”

Cummins is the president of Animal Advocates, a nonprofit based in Los Angeles, Calif. that works to prevent cruelty to animals. She plans to appeal the ruling, claiming a conflict of interest.

“On one hand I'm shocked because Plaintiffs did not show the essential elements for a claim of defamation or breach of contract. On the other hand I'm not really that shocked. Before one hearing Plaintiffs' attorney Randy Turner of Bailey & Galyen told me that he's known this Judge for years. He insinuated that the Judge will automatically rule in his favor, and it appears that he has. I believe there was a conflict of interest and a new trial by a new Judge is in order.”

On her website, animaladvocates.us, Cummins posted information documenting other complaints made against Lollar. Judge Brigham ordered her to remove that information, a ruling that she also plans to challenge on the basis of the Freedom of Information Act.

Nonprofit Sues California Over Teacher Tenure Laws

A nonprofit education group is suing the state of California over five laws they say protect ineffective teachers and lower school quality for poor children.

Los Angeles-based Student Matters filed the lawsuit today with the goal of getting the laws overturned, according to a report on KQED News. The laws in question set up a seniority system for public schools in the state.

According to the organization's website, Student Matters is "committed to ensuring that all of California’s children receive a quality education." It is run by David F. Welch, an executive at a Silicon Valley fiber-optic communications firm.

Josh Pechtalt, president of the California Federation of Teachers, said in a statement that the lawsuit is "misguided," and that the real problems of public education stem not from teachers, but from money.

"The real problems of public education really are not about teachers having due process rights," he said, "the problems have to do with massive cuts to the classroom, and frankly defunding of public schools now for a number of years."

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

Tea Party Group Ruled A PAC, Not Nonprofit

A Texas judge ruled that a Tea Party group is not a nonprofit as it claims but an unregistered political action committee (PAC).

Judge John Dietz of the Travis County District Court made his ruling based on a lawsuit the Texas Democratic Party filed against the King Street Patriots in 2010, according The Houston Chronicle. The suit alleged the organization made illegal contributions to the Republican Party and trained poll-watchers in cooperation with GOP candidates.

All of these actions would violate laws governing nonprofit political groups, which is what the King Street Patriots claimed they were. The organization was founded in 2009 with one of its main issues being voter fraud. The group reviewed public information of voter registration during the 2010 elections, and reported those findings to the county registrar. They also trained hundreds of poll watchers to look for potential fraud.

The ruling would force the King Street Patriots to reveal its list of funders. They would, however, be allowed to participate in partisan activities. The Liberty Institute, a nonprofit legal firm based in Plano, Tex. that represents the King Street Patriots, says they plan to appeal the Judge's ruling.

The NonProfit Times recently published a story on how the IRS is monitoring political groups like the King Street Patriots to see if they are adhering to rules governing nonprofits.

You can read the full story in The Houston Chronicle.

Nonprofit Director Sentenced In Child Porn Case

The founder and former director of a San Francisco, Calif.-based nonprofit was sentenced to six years in prison for possession of child porn. He will begin serving his sentence on May 8.

Anthony Josef Morris, who was the head of Kids Serve Youth Murals, was also ordered to pay $6,500 in restitution by U.S. District Judge Richard Seeborg, according to Mill Valley Patch. That money will be distributed among the victims identified in Norris's collection. He pleaded guilty in November to one count of possession of child pornography.

U.S. Attorney Melinda Haag said that during his plea, Norris admitted to possessing more than 600 images on his computer of kids engaging in sexual acts with adults. These included horrific images of children being subjected to sexual assault. Norris was arrested in June of last year, in a story that was reported by NPTtv, after FBI agents discovered he had posted some of his images online. Those postings were then traced back to Norris's home computer.

Even more disturbing, San Francisco United School District officials said they found other offensive images hidden in tiles in at least three of the murals his organization created for schools and other sites across the city. Those images were quickly removed by the school district.

You can read the full story in Mill Valley Patch.

Group Behind Controversial Calendar Shuts Down

A Denver, Co.-based organization has agreed to cease its operations after reaching a settlement with the state over whether the group was really a nonprofit.

Fired Up For Kids would transfer all of its assets to a new group, according to a report on TheDenverChannel.com. The group got in hot water with Colorado's Office of the Attorney General over its sale of firefighter calendars. It's website stated that all proceeds from the calendars would go to The Children's Hospital Burn Center, and it's pamphlets presented Fired Up For Kids as a nonprofit.

The Attorney General's office saw things much differently.

In December 2011, the state filed a lawsuit against Fired Up For Kids alleging the group operated as a for-profit business despite the fact that it had registered as a nonprofit. Prosecutors also accused the organization's owner, Kirsten Hamling, of using company accounts and assets for personal uses, including airline tickets and gym memberships. Hamling defended herself after the lawsuit was fired, saying that the donations to the hospital were voluntary and that she was "in no way contractually obligated" to give money to the hospital.

In the end, it appears Hamling decided it was a better course to settle rather than fight the lawsuit.

Assets for the now dissolved Fired Up For Kids will go to a new organization, Colorado Firefighter Calendar, Inc. Proceeds from the calendar will still go to the Children's Hospital Burn Center, in addition to promoting fire safety and awareness.

You can read the full story on TheDenverChannel.com.

Former Nonprofit Exec Dies After Indictment

A former chief financial officer (CFO) of an Austin, Tex.-based nonprofit died only days after she was indicted for theft.

According to The American-Statesman, Mary Ann Hernandez, 58, was charged with funneling more than $100,000 from Austin Resource Center for Independent Living Inc (ARCIL) to her personal credit card accounts from 2005 to 2009. She was arrested hours after her indictment on March 1 and was released after posting $250,000 bail. Authorities said she died on March 6. The cause of her death is unknown pending the results of an autopsy.

The indictment charged Hernandez of two felonies: One count of misapplication of fiduciary property with a value of $100,000 or more but less than $200,000 and another count of theft of $200,000 or more but less than $100,000. These all stemmed from accusations that, between March 2, 2005, and Jan. 30, 2009, she allegedly transferred checks from ARCIL's Bank of America account to make payments on her Visa credit card accounts.

The investigation of Hernandez started after the state auditor's office was contacted by the Department of Housing and Community Affairs, which had contracted with ACRIL from 2005 to 2009 to provide rental assistance to disabled people. The accusations against Hernandez were also reported in an earlier edition of NPTtv.

With their only suspect now gone, prosecutors are discussing whether to dismiss the case. Jason Knutson, an assistant district attorney with the state's Public Integrity Unit, told The American-Statesman that she was in charge of all the money as CFO, so they have no reason to believe anybody else was involved.

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

Nonprofit CFO Accused Of Embezzlement

A top executive of a Bronx, N.Y.-based nonprofit was indicted by the state Attorney General's Office for allegedly stealing thousands of dollars from the organization.

The New York Post reported today that Clement Gardner, who was the chief financial officer (CFO) of the Christian Community Benevolent Association (CCBA), allegedly embezzled at least $75,000 dollars in funds. The indictment alleges that Gardner wrote the checks to himself from 2004 to 2007, writing false memo lines to cover himself. State Attorney General Eric Schneiderman announced yesterday that his office launched the corruption probe after getting a referral from the FBI.

The indictment of Gardner is the first result from an ongoing probe of nonprofits with ties to state lawmakers. CCBA was previously run by Bronx state Sen. Ruben Diaz Sr., who steered $500,000 in state grants to the nonprofit.

Gardner is currently being held without bail as he awaits a hearing. He has claimed he wrote the checks because he was not being paid for the work he was doing for CCBA. You can read the full story in The New York Post.

Investigators: Nonprofit Faked Job Placements

A nonprofit hired by New York City to help residents find jobs falsified 1,400 job placements, according to NYC investigators.

ABC News reported Saturday that Seedco, which operates in 14 states and Washington, D.C., used data from past and current clients to falsely claim they had placed the individuals in jobs. The NYC Department of Investigation claims the organization also claimed credit for placing people in jobs they'd lost before they sought help. The city's investigation found 1,400 false claims from 2010 to 2011, but there could be many more because of the city law permitting the shredding of documents.

City officials first learned of the allegations against Seedco in an August column in The New York Times. The matter was quickly referred to investigators after the article was published. The nonprofit's $22.2 million contracts with NYC are to be reassigned over the next two months.

Barbara Dwyer Gunn, president and CEO of Seedco, said in a statement that they "deeply regret" what happened at the local Workforce1 centers which they ran. She said the organization fired the employees responsible and implemented policy changes to ensure their data is accurate.

You can read the full story in ABC News.

Nonprofit Exec Testifies In Corruption Trial

The former executive director of a Pennsylvania-based nonprofit testified yesterday in the corruption trial of the organization's founder, ex-congressman Mike Veon.

The Tribune-Review reported today that John Gallo, who was executive director of the Beaver Initiative for Growth (BIG), testified that he knew there was trouble for the nonprofit when he discovered checks written in its account that had no connection to the organization.  Gallo was the first witness in the case against Veon, who is accused, along with co-defendant Annamarie Perretta-Rosepink, of theft-related offenses and conflict of interest.  The two are also accused of funneling $10 million in state grants to BIG.

Before being ousted in 2006, Veon was a Democratic power broker from Beaver Falls, Pa.  He is currently serving a 14-year prison sentence for previous corruption charges, and faces 19 felonies in the BIG case.  Perretta-Rosepink faces six theft-related counts.

Gallo told the jury that he first found the suspect checks after returning from a month's leave.  The checks were written by Perretta-Rosepink and included a $5,000 payment to the late Rep. Terry Van Horne, who had no association to BIG, and payments to a legislative office in Midland.  Veon's lawyer, Joel Sansone, accused Gallo of stealing money from the organization, citing numerous expenses for flat amounts, such as $400 and $150.  Gallo denied those claims, but acknowledged he could not remember all of the nonprofit's expenses. 

Prosecutor Deputy Attorney General Laurel Brandstetter told the jury that Sansone's allegations were "baseless," and accused Veon of using BIG money not to bolster the local economy, but to pay his legislative chief of staff and his law firm for consulting services, among other things.

The trial will resume on Tuesday.  You can read more about it in The Tribune-Review.

Nonprofit Sues Tax Collector Over Public Records Request

A Florida based nonprofit is suing a Palm Beach tax collector for refusing to release public records of a $1.9 million settlement her office reached with over a dozen online travel companies.

The Palm Beach Post reported yesterday that Citizens for Sunshine, a government watchdog group based in Sarasota, Fla., had sent a member to the office of Palm Beach tax collector Anne Gannon to inspect the document, but was denied access by Gannon's staff.  These types of legal settlements are usually considered fair game under public records law, but Gannon's office says it can't release the documents until it notifies the attorneys of the travel companies.

Citizens for Sunshine disagrees, saying the public has a constitutional right to see the documents, and has asked a circuit court judge to order Gannon to release the records.  Additionally, the nonprofit wants reimbursement for their legal fees.  Gannon told The Palm Beach Post that she plans to release the documents on Tuesday.  Additionally, she said she was not aware of the group's initial request.

The documents in question reflect a settlement that ended a lawsuit that Gannon filed in 2009 that alleged that certain travel companies, including Expedia, Orbitz, and Travelocity, were not giving the county all of the tourism taxes they collect from the hotel rooms they book.  The was for $1.9 million, nearly $1.3 million of which will be used to pay tourism-related expenses.

You can read the full story in The Palm Beach Post.

The Case Of The Disappearing Donations

The Los Angeles Times wrote today that 200 nonprofit groups have reported that all of their donated funds have vanished after the organization that watched over the money, the International Humanities Center, shut down last month.  While the closing of the operation may have come as a bit of a surprise, it was a bigger shock when many of its clients found they were missing hundreds of thousands of dollars.

Directors at 40 of the nonprofits affected have tallied their potential losses at $877,000.  The California attorney general's office is currently investigating the matter.

The nonprofits that used the International Humanities Center were mostly small organizations that didn't have the resources to handle the donations and their related paperwork.  The center acted as a financial services organization and handled all of this work for a small fee.

Steve Sugarman, the center's executive director, assured his clients in an e-mail that their funds had been spent appropriately.  This set off a bit of a red flag because fiscal sponsors are not supposed to spend a client's money for its own reasons.  When pressed on this, a consultant for the center, David DelGrosso, told nonprofits that their donations were used to pay legal fees and other bills, but he had been assured those funds would be replaced.  This consultant also said that the center had wasted project funds on a scam e-mail campaign.  This scam cost the center $200,000, and was a big factor in its downfall.

For now, many of the affected nonprofits are unable to pay their staffs or bills.  Some of them have little hope that they will ever see the money again, and have explained the situation to their donors.  This case is a perfect example of how careful nonprofits need to be when handing their funds over to third party.

You can read the full story in The Los Angeles Times.

How To Recover From Embezzlement At Your Nonprofit

There have been a number of financial crimes at nonprofits in the month, including one case of a volunteer embezzling money.  This is one of the worst case scenarios for one nonprofit, but it's one that can happen any time.

Being prepared is the name of the game when dealing with financial crimes.  You need a solid game plan to lean on if your nonprofit is hit by embezzlement.  This type of crime effects all businesses, but it hits nonprofits particularly hard given the nature of their finances.  If an embezzler or fraudster is allowed to get away with their crimes, it can set an organization's mission back years.  It could even completely ruin the mission depending on the amount of money stolen.

In her book "Good Counsel," Lesley Rosenthal offered some advice for nonprofits dealing with embezzlement or financial fraud.  She urges organizations to resist the urge to cover up the crime from auditors, board members, or other outside authorities, as this can only bring bad press to an already negative situation.  She then outlines six tips to help nonprofits recover from embezzlement:

• Make sure that the full facts are known.
• Punish the offender.
• Report the fraud or embezzlement and cooperate with law enforcement authorities and other concerned parties.
• Reclaim stolen property as quickly as possible.
• Conduct an internal investigation to determine what went wrong. Were fiscal controls or audit processes lacking? Were there weak checks-and-balances? Make sure any problem that is discovered is highlighted in detail.
• To protect against future issues, incorporate new safeguards to your existing measures.

If you follow these six steps, your organization should be well on its way to recovery.  You can learn more tips like these by subscribing to our weekly newsletters.