Story of Cindy McCain's disgraced charity gains attention

I'm not so arrogant to think that my story from last week finally prompted the mainstream media to pay attention to a huge story they have been ignoring... but I am just righteous enough to remind politicians that if they are going to brag about their philanthropic efforts starting a charity... they should be compelled to tell the rest of the story if it involves you getting your drugs from a charity that you put at risk:

A doctor with McCain's medical charity who supplied her with prescriptions for the drugs lost his license and never practiced again. The charity, the American Voluntary Medical Team, eventually had to be closed in the wake of the controversy. Her husband was forced to admit publicly that he was absent much of the time she was having problems and was not aware of them.

"So many lives were damaged by this," said Jeanette Johnson, whose husband, John Max Johnson, surrendered his medical license. "A lot of good people. Doctors who volunteered their time. My husband. I cannot begin to tell you how painful it was. We moved far away to start over."

McCain's addiction also embroiled her with one of her charity's former employees, Tom Gosinski, who reported her drug use to the DEA and provided prosecutors with a contemporaneous journal that detailed the effects of her drug problems.

But if you still think my outrage is over the line.. please... keep emailing me.

Did she really steal drugs from her own charity?

Cindy McCain looked so nice in her speech at the GOP convention tonight.

It's hard to believe they featured the story of how she started her own nonprofit called the American Voluntary Medical Team, but they left out the part of the story where she was investigated by the DEA for stealing drugs to feed her addiction to prescription painkillers.

I believe she wore red that day. She granted semi-exclusive interviews to one TV station and three daily newspaper reporters in Arizona, tearfully recalling her addiction, which came about after painful back and knee problems and was exacerbated by the stress of the Keating Five banking scandal that had ensnared her husband. To make matters worse, McCain admitted, she had stolen the drugs from the American Voluntary Medical Team, her own charity, and had been investigated by the Drug Enforcement Administration.

The local press cooed over her hard-luck story. One of the four journalists spoon-fed the story -- Doug McEachern, then a reporter for Tribune Newspapers, now a columnist with the Arizona Republic (and, it must be added, normally much more acerbic) -- wrote this rather typical lead:

"She was blonde and beautiful. A rich man's daughter who became a politically powerful man's wife. She had it all, including an insidious addiction to drugs that sapped the beauty from her life like a spider on a butterfly."

Hmmm. But that's old news, right?

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...

Kate Barr is not happy with ACORN

I agree with Kate... it's hard to think of how anyone can justify ACORN's reaction to this story. I know it's painful to say. Trust me, I love ACORN and the important work they do.

I'm not saying I agree with the wackos like Michelle Malkin or the Consumer Rights League, but this is a really big fuck-up.

Thank god for whistle blowers. This one was a true hero.

Not so blind item

Which disgraced former executive for a well-known disaster relief organization was rumored to be applying for the vacant position of Gautier City Manager down in Mississippi so that the alleged baby daddy can be closer to his Southern Belle's new baby?

Vastly different approaches

Stephanie Strom at the New York Times compares the vastly different approaches taken by Acorn and the Points of Light Institute when each learned off potential financial embezzlement.

Acorn chose to treat the embezzlement of nearly $1 million eight years ago as an internal matter and did not even notify its board. After Points of Light noticed financial irregularities in early June, it took less than a month for management to alert federal prosecutors, although group officials say they have no clear idea yet what the financial impact may be.

A whistle-blower forced Acorn to disclose the embezzlement, which involved the brother of the organization’s founder, Wade Rathke.

The brother, Dale Rathke, embezzled nearly $1 million from Acorn and affiliated charitable organizations in 1999 and 2000, Acorn officials said, but a small group of executives decided to keep the information from almost all of the group’s board members and not to alert law enforcement."

Yuck. But wait it gets worse:

"Wade Rathke said the organization had signed a restitution agreement with his brother in which his family agreed to repay the amount embezzled in exchange for confidentiality.

Wade Rathke stepped down as Acorn’s chief organizer on June 2, the same day his brother left, but he remains chief organizer for Acorn International L.L.C.

He said the decision to keep the matter secret was not made to protect his brother but because word of the embezzlement would have put a “weapon” into the hands of enemies of Acorn, a liberal group that is a frequent target of conservatives who object to its often strident advocacy on behalf of low- and moderate-income families and workers."

Don't you see... they kept it a secret so as not to give their enemies a weapon.

Travel voucher horror story hits Points of Light Foundation

The NonProfit Times broke a story this week about an unfolding scandal at the Points of Light Institute.

"An estimated 1,100 customers who purchased travel vouchers for airline flights from the Points of Light Institute’s store on eBay have been left with nothing. The Points of Light Institute has closed that area of the eBay store and is working with law enforcement to investigate what it is calling “significant financial and operational irregularities.”

Each reservation is for one to four people, so as many as 4,400 travelers could be impacted. Sources told The NonProfit Times that travel had been booked through May 2009 that could total more than $1 million."

Michelle Nunn, president and CEO, was interview by The NonProfit Times on Tuesday and tried to explain how the organization uncovered the scandal.

"Two senior managers learned of the irregularities through customer complaints, which they explored and ultimately verified through an independent contractor, and reported to Nunn on the evening of June 26, she said. Customers were notified of the situation late Friday, July 4, at which time the refund application process began.

Because of the ongoing investigation, Nunn could not elaborate on the type of “irregularities.” She said the U.S. Attorney’s Office in Washington, D.C., was contacted within 24 hours, as was the organization’s counsel -- McKenna, Long & Aldridge -- which is doing its own investigation."

It's amazing what kinds of problems managers can actually uncover when they explore customer complaints. Sounds like whoever was pulling off the scam set-up a complex way of hiding what they were doing. Apparently, the organization is still trying to figure out exactly what happened.

"The independent contractor was terminated “as soon as we learned of these issues,” Nunn said. The contract was created and begun in 2003 as a program of the Points of Light Foundation, which merged with the Hands On Network last year. The independent contractor, Maria Herrmann, was a former employee in business development at the Points of Light Foundation, but Nunn did not know the duration of her employ prior to that.

Herrmann is no longer listed on the organization’s Web site and calls to her cell phone and home phone were not returned. A woman answering the door at Herrmann’s Washington, D.C. residence told a reporter she could not help her and declined to say if she was in fact Maria Herrmann."

Call me a cynic, but the whole idea of people raising money for charities by selling discounted travel vouchers sounds shady. Call me a purist, but I get really queasy when the donor's motivation is driven by the idea of "getting something for free" instead of for the donor intent being on helping support the mission.

In hindsight, I wonder if the Board of Directors sees this observation by The NonProfit Times as a damning indictment of the senior management and their own culpability is allowing this to happen:

Despite thousands of tickets being sold, Nunn described the eStore as a “very small enterprise,” grossing about $100,000 and netting $15,000 in the fiscal year ending 2007. She explained that the numbers "are the totals that were reported on our books and in our audited statements of Points of Light Foundation (pre-merger). The recent discoveries obviously do not align to these numbers and that is what is under investigation.”

The NPT story can be from here and to read about a traveler's horror story, go here.

UPDATE: Some people at the eBay Forums website think that incentive travel company Mitch-Stuart, Inc. is to blame. I wonder if there is going to be a blame game coming next? Hermann was quoted in the NPT in May of 2007 talking about Mitch-Stuart.

University's fundraising ethics go up in smoke

Holy smokes!

The New York Times reported yesterday that Virginia Commonwealth University, a public institution, signed a secret grant agreement in 2006 to do research for Philip Morris USA.

"The contract bars professors from publishing the results of their studies, or even talking about them, without Philip Morris’s permission. If “a third party,” including news organizations, asks about the agreement, university officials have to decline to comment and tell the company. Nearly all patent and other intellectual property rights go to the company, not the university or its professors.

“There is restrictive language in here,” said Francis L. Macrina, Virginia Commonwealth’s vice president for research, who acknowledged that many of the provisions violated the university’s guidelines for industry-sponsored research. “In the end, it was language we thought we could agree to. It’s a balancing act.”

But the contract, a copy of which The New York Times obtained under the Virginia Freedom of Information law, is highly unusual and raises questions about how far universities will go in search of scarce research dollars to enhance their standing. It also brings a new dimension to the already divisive debate on many campuses over whether it is appropriate for universities to accept tobacco money for research."

Apparently the nation's largest tobacco company also has similar agreements with other universities - although a spokesman declines to say how many or which ones.

Top McCain fundraiser resigns

One of the McCain campaign's most important fundraisers resigned as national finance co-chair. Former Rep. Thomas G. Loeffler, a Texan who is among the McCain campaign’s most important advisers, resigned over lobbying entanglements, a Republican source told Politico on Sunday.

Loeffler was part of the rescue mission for the campaign last year after its spending badly outstripped its fundraising, leading to a contraction of the campaign that left McCain running a bare-bones operation in the lead-up to his breakout New Hampshire primary victory.

Loeffler’s departure followed a report this weekend by Newsweek’s Michael Isikoff that Loeffler’s “lobbying firm has collected nearly $15 million from Saudi Arabia since 2002 and millions more from other foreign and corporate interests, including a French aerospace firm seeking Pentagon contracts.”

Apparently the "maverick" presidential candidate didn't want to look bad in the media... but he has no problems appearing with President Bush at a fundraiser in Phoenix on May 27th.

Perez Hilton takes Sting to task on fundraising

Earlier this week, the popular celebrity blogger Perez Hilton reported the following news about the announced final concert ever in August by rock band the Police.

"This final concert will be a fundraiser with proceeds benefiting the production of arts programming for New York's public television stations Thirteen/WNET and WLIW New York. Tickets will be available nationally online via the Thirteen/WNET and WLIW Web sites. The band also announced that they will contribute $1 million to NYC Mayor Bloomberg's MillionTreesNYC initiative — a gift the city will match — to plant trees all over New York City."

It was interesting to hear Perez report such positive news for Sting, because the day before he did a hit job on Sting's Rainforest Foundation. The self-appointed "celebrity gangster" picked up on a NY Post article that criticized the distribution of funds after a previous fundraising concert:

"The 2006 concert - which drew Lenny Kravitz, Sheryl Crow and Will Ferrell to the landmark stage - raised $2,156,989, according to the latest available IRS tax filing.

Yet only $887,374 of the money raised, 41 percent, was divided among the charity's eight programs that support native-land claims and forest preservation in Latin America and Africa - a paltry percentage, according to agencies that monitor nonprofits."

You can read the original NY Post article here.

Hunting lobby forces stores to pull support of pet shelters

There are 181 Meijer stores in Michigan, Illinois, Indiana, Kentucky, and Ohio. The stores are called hypermarkets because they carry a combination of groceries and department store goods.

Unfortunately, this week they made a very bad decision to stop supporting a pet shelter because of complaints from a lobby group that claims to represent 35,000 hunters. The store is now getting the butt end of a reputation as not caring for the pets of families being foreclosed on.

Meijer had originally started a program to donate $1, up to $5,000, for every entry in an online pet photo contest. However, the plug was pulled last Friday after the U.S. Sportsmen's Alliance charged the group organizing the Foreclosure Pets Fund is anti-hunting.

Shandra Martinez in Tuesday's Grand Rapids Press cites an Alliance press release from that was circulated on the internet with the contact information for Meijer chairman Hank Meijer:

"The money donated to the HSUS through this promotion, while not going directly to its anti-hunting campaign, will free up money from the organization's general fund that can be used to attack the right of sportsmen."

The pressure seemed to have worked because Meijer announced they were stopping their support. You can learn more about the cowardly response by the "heartless inhumane hypermarket" by reading the rest of the story.

If you want to make your opinions heard, you can contact Meijer CEO and Chairman Hank Meijer at 2929 Walker Ave. NW, Grand Rapids, Michigan, 49544-9428; phone – (616) 453-6711; fax – (616) 791-2572.

This story was tipped off to me by someone who emailed me a link to this story on "Fundraising and the Fungibility Problem" over at the Acton Institute Power Blog.

Paper sees jealousy driving criticism of opera marketer

The Wall Street Journal had a great article recently on Peter Gelb, general manager of the Metropolitan Opera in New York City.

"...Mr. Gelb has managed to enchant both the masses and the elites. Using film and theater directors, he has invigorated the Met's offerings without introducing sadomasochism and other freakish "updates" common in Europe. When the current season ends in mid-May, the Met expects to have sold 87.5% of available tickets, up from 76.8% two years ago, and box office revenues will likely reach $93 million, up from $82.7 million."

But it hasn't come without controversy:

"All of the things he has done have also been quite costly. The Met's budget has grown more than 21% in two years, to a projected $268.3 million in the fiscal year ending July 31 from $221.7 million in fiscal 2006. Its deficit -- despite energetic fund raising -- is likely to widen to somewhere between $6 million and $10 million this fiscal year, compared with a deficit of $4.5 million two years ago.

Which is why there are doubts about Mr. Gelb's strategy, even among his supporters. Some fear that his Falstaffian model is unsustainable, that he is creating a bubble of interest that will inevitably deflate, leaving the Met overextended and mired in the red. Others, says Brian Dickie, general director of the Chicago Opera Theater, admire Mr. Gelb but regard him as "a marketing man who loves opera" -- overly reliant on gimmicks and buzz whose power will fade.

Certainly, jealousy is motivating some of the gossip. But whether Mr. Gelb -- who says he's a producer, not a marketer -- succeeds or fails is important because, as he brags, "we're being copied by other companies, and we're the inspiration for other arts organizations as well." He volunteers that he was invited recently to speak about his strategy at Harvard's Hauser Center for Nonprofit Organizations -- stopping a beat before adding that his cousin, Christopher Stone, runs the Hauser Center. If Mr. Gelb is leading others astray, there will be blood elsewhere in the cultural world.

Gossip? Blood? At the opera? No...

Congressman's daughter paid $270,000 fundraising commission

Conservative bloggers, like the two numbskulls who run Majority Accountability Project, have been all over the story of how a Democratic Congressman's daughter was paid seemingly large sums of money to fundraise on his behalf.

From Newsday.com:

Molly Bishop has made nearly $270,000 since 2002 fundraising for her father, Rep. Timothy Bishop, and has broadened her clientele since 2006 and earned $164,000 working for other local Democrats, according to state and federal records.

Bishop, 29, who started working as a part-time fundraiser in her father's first campaign in 2002, billed Brookhaven Supervisor Brian Foley's campaign $118,000 and the Brookhaven Democratic Party $35,000 and has worked for a half dozen other local candidates, according to reports filed with the State Board of Elections and the Federal Election Commission.

Other bloggers have long chronicled the potential ethical problems of hiring family members as lobbyists, but the subject of whether family members should be paid to fundraise for candidates is only now gaining traction.

Last year, Mitt Romney's campaign got attention from this blog (and others) when they paid students who raised at least $1,000 for the former presidential candidate a 10% commission on all money raised.

I think it's great that people want to look more closely at politicians who pay relatives a commission to fundraise on their behalf.

Greenwich church can't find $400,000

The New Haven Register is reporting that church officials have concluded their investigation into a Greenwich priest who failed to account for more than $400,000 in church funds he kept in secret accounts.

The Roman Catholic Diocese of Bridgeport said it has provided its findings to federal authorities after investigating the Rev. Michael Moynihan. He resigned last year as pastor of St. Michael Church in wealthy Greenwich and was stripped of his priestly authority last month after he was found living with another man.

The newspaper says that the report offers few details on how Moynihan might have spent church money, but it does cite $58,000 used to buy a boat as well as restaurant, travel expenses and a livery service. The article goes on to say:

Moynihan was stripped of his priestly authority after the Bridgeport Diocese learned last month that he shared a Manhattan apartment with another man. Moynihan failed to end that association despite promises to do so, and engaged in “obfuscation” when questioned about church money, Bishop William E. Lori wrote in a letter Thursday to parishioners.

It seems crazy to me the diocese was more concerned with the priest's co-habitation with another man that they were with their terrible internal controls. Then again, it appears that the church never would have found out about the secret accounts unless the F.B.I. tipped them off to the banking deceptions.

Bridgeport diocese officials say they have made “great strides” in implementing a new system of financial procedures and controls in all 87 parishes in Fairfield County. Those steps have become a model for other dioceses, Lori said in a telephone interview Friday.

“I think people can have a great deal of confidence that the donations to the parishes are used well and wisely for the mission of the parish,” Lori said.

Hat tip to Mike Burns (again) at Nonprofit Board Crisis for blogging this story.

Nonprofit CFO fired after gambling with $3.6 million

I came across a really neat blog today run by Mike Burns called Nonprofit Board Crisis. The website pointed me in the direction of this story in the San Francisco Chronicle:

The chief financial officer for the nonprofit that runs the recently opened, 800-car underground garage next to the M.H. de Young Memorial Museum in Golden Gate Park has been fired as investigators probe the disappearance of $3.6 million in garage funds - money that may have been flushed on the stock market.

The missing millions came to light a couple of weeks back when a vendor called the chairman of the Music Community Concourse Partnership board to complain that he hadn't been paid for his work on the garage, which opened in 2005, said Sam Singer, a spokesman for the nonprofit.

When garage chief financial officer Greg Colley was called in to explain, he asked for a little time to sort things out, Singer said. The next day, Colley turned up with an attorney and said he had borrowed the money to play the stock market, Singer said. Colley said he had fully intended to return the money, but then the market took a nosedive.

With that, the nonprofit fired him, Singer said.

In situations like these, you have to ask how the hell the Board of Directors allowed this much money to be "borrowed" without a proper internal control process.

Hundreds of thousands presumed stolen from Republican fundraising arm

As if the Republicans aren't having enough problems raising money to help candidates defend themselves in the upcoming election, the New York Times has more details today of an unfolding scandal at the NRCC:

Hundreds of thousands of dollars are missing and presumed stolen from the chief fund-raising arm of House Republicans, according to party officials who described the findings of emergency internal audits.

The financial records of the group, the National Republican Congressional Committee, may also have been falsified for several years, Republican officials said. The campaign committees of several Republican lawmakers may also have been victims of a scam that is now under criminal investigation by the F.B.I.

The audits were ordered after the abrupt departure several weeks ago of Christopher J. Ward, who had been treasurer of the committee. Lawmakers said that Mr. Ward, who served a similar role for dozens of individual members of Congress and their political committees, is the focus of the F.B.I.’s criminal investigation.

There are more details over the TPM Muckraker and the The Hill.

Planned Parenthood apologizes for fundraiser's reaction

Last week a reader sent me this link of a disturbing YouTube video which shows a recorded phone conversation with a senior fundraiser at the Idaho chapter of Planned Parenthood during a student group's undercover sting operation.

An unidentified caller attempts to record the fundraisers initial verbal reaction while the donor makes increasingly racist comments during the conversation. On Feb 28th, an article ran in the Idaho Statesman with the organization's apology:

Planned Parenthood of Idaho officials apologized Wednesday for what they called an employee's "serious mistake" in encouraging a donation aimed at aborting black babies.

They also criticized The Advocate, a right-to-life student magazine at the University of California-Los Angeles, for trying to discredit Planned Parenthood employees in seven states in a series of tape-recorded phone calls last summer.

The call to Idaho came in July to Autumn Kersey, vice president of development and marketing for Planned Parenthood of Idaho.

On the recording provided by The Advocate, an actor portraying a donor said he wanted his money used to eliminate black unborn children because "the less black kids out there the better."

While more than 40,000 people have seen the video that was emailed to me, only 5,000 have seen this extended version with the Autumn Kersey's response when they called her back.

"Restitution is what we're after"

Rodney Rodis, a retired Roman Catholic priest, who plead guilty to mail fraud and money laundering in the theft of more than $600,000 in donations from St. Jude Church and Immaculate Conception Catholic Church in Louisa County, Virgina between 2002 and 2006 was sentenced to 63 months in prison.

According to Zinie Chen Sampson's article for the Associated Press:

Authorities said Rodis set up bank accounts and a post office box where he directed parishioners to send contributions. Rodis then transferred the money to his personal account, using it to support his family — a wife and three children, whom he concealed from parishioners. He also wired money overseas to relatives who used it to buy real estate.

Lawyers for the 51 thief argued for leniacy because of health issues. Meanwhile, the parishes feel betrayed. The man who succeeded Rodis said after the hearing he wasn't convinced of the sincerity of his predecessor's apologies.

"He did this for five years, systematically, and in a very organized way," the Rev. Michael Duffy said. "Restitution is what we're after."

A judge gave Rodis credit for time served, but ordered him to repay the Roman Catholic Diocese of Richmond more than $591,000 and required the Filipino native to meet with federal immigration officials for possible deportation after his prison term ends.

Charity scam figure set for release from federal custody

The NonProfit Times posted a detailed story today on John G. Bennett Jr.'s pending release from federal custody:

According to the U.S. Bureau of Prisons, he will be set free from a halfway house in Philadelphia on March 5. He was sent there this past Sept. 11 after serving nearly 10 years at the Fort Dix Federal Correctional Institute in New Jersey.

Go here to read more details about Bennett's role in what I think was one of the biggest charity scams of all-time.

Yep, he's still in jail

Thanks to the research assistance of a quick-witted old friend, Don't Tell the Donor has learned that John G. Bennett Jr. is still in prison serving a 12 year sentence for bank fraud, mail fraud, wire fraud, false statements, filing false tax returns, money laundering and money laundering to promote unlawful activity.

The Federal Bureau of Prisons website shows that inmate number 50156-066 is projected to be released on March 5th, 2008. So lock up your endowments fellow fundraisers, in less than a month he's going to be released from Federal Correctional Institution in Fort Dix, New Jersey.

To read more about "the six-year long Ponzi-turned-pyramid scam defrauded roughly 150 charities out of more than $100 million," go here.

Be sure to vote in our reader poll - should Bennett have been sentenced to more than 144 months in prison?