Bombshell internal report leaked on Shriners Hospital fundraising

An internal investigative committee established by the joint boards of the Shriners of North America fraternal organization and the Shriners Hospitals for Children has released some disturbing accusations about fundraising.

The New York Times published this copy of the 23-page report which is stamped CONFIDENTIAL and "Attorney-Client Priviledged." Stephanie Strom's article says:

"The committee found that the chairman of the Shriners Hospitals Board of Trustees, Ralph Semb, sought to dismiss a fund-raising executive who had refused to hire a direct-mail company Mr. Semb and another board member tried to steer him to."

Semb (who is pictured here) denies any wrongdoing, the documents go on to report:

"Most of the committee’s report relates to the dismissal and rehiring of Mr. McGonigal, who said he did not hire the direct-mail company favored by Mr. Semb and Mr. Bracewell because the company appeared to have ties with Vantage Financial Services, which had performed poorly for the Shriners in the past.

The Shriners employed Vantage to handle fund-raising for the hospitals from 1999 through 2003. Out of $46.2 million raised by Vantage, the Shrine received only $2.5 million, according to the report."

Seems like there might be a lot more funny business going on than just those tiny hats and the mini-cars they drive at parades.

UPDATE: I was referred to this website which has more juicy information on Vantage:

“The Vantage Group and its subsidiaries Vantage Financial Services Inc. and Vantage Direct Marketing Services Inc. have agreed to pay $4.5 million to settle civil postal fraud charges,” said directmag.com, also in 2003.

It continued, “The government’s complaint, which named Henry R. Lewis (then Vantage’s CEO) and Harry S. Melikian (then Vantage’s CFO), alleged that while conducting fundraising programs for nonprofits, the company improperly mailed 78 million pieces of mail at the reduced nonprofit rate, knowing they were not entitled to use the rate for their cooperative mailings.”

Apparently, the story goes like this:

"The complaint, filed in 1998, noted that in 1990 the Postal Inspection Service investigated Vantage for sending illegal cooperative mailings.

At that time, a U.S. Postal Inspector informed Vantage, Lewis and Melikian that mailings sent pursuant to Vantage’s standard contract were ineligible for the reduced non-profit rate because Vantage had a financial stake in the mailings. As a result of the 1990 investigation, Vantage and one of its non-profit clients paid a postage deficiency to the government.

In response to that investigation, the complaint said Vantage revised its standard contract to make clear that, in the future, Vantage would not have a financial stake in the programs it conducted on behalf of non-profit clients.

Based on the revised contracts, the Postal Service permitted Vantage to mail at the non-profit rate on behalf of its nonprofit clients.

The complaint alleges, however, that Vantage then entered into secret
“side letters” with many of its non-profit clients, agreeing to take a financial
state in the mailings."

I should would be curious who leaked the internal Shriners report...