Children’s Charity Under Investigation

It’s hard to fathom. How could someone use children as a means to steal money? But that’s precisely what authorities think people did in the city of Larnaca, Cyprus.

According to CyprusMail, The Pancyprian Foundation of Affection and Love to Children is under investigation for not keeping accounting books. The discrepancies originally surfaced in 2012 after the Audit Office found little to no financial records on file.

The foundation raised funds by selling calendars at busy intersections. The Audit Office was unable to find any paperwork that kept track of how many calendars were sold or how much money was raised. As a result, officials are now pursuing legal action.

But it gets worse than that. State broadcaster CyBC reported that the foundation had been using the names of reputable nonprofit organizations to convince people to purchase their publications.

Among the organizations victimized by the scandal is The Pancyprian Association for the Protection of Cerebral Palsy and Disabled Children. It just goes to show that criminals will stop at nothing to try and steal peoples’ hard-earned money.

The recent news has caused so much outrage that the attorney general is now making it a priority to shut down the charity for breaking the Associations and Institutions Law.

Authorities want to take the opportunity remind people to be extra cautious when donating to charities around the holiday season. Law enforcement officials say that there is always an influx of fraudulent and counterfeit charities that pop up just before Christmas.

In order to prevent being taken advantage of, volunteerism commissioner Yiannis Yiannaki advised members of the public to ask to see a license before making a donation to charity. Legitimate charities will always have a license handy. If they don’t, citizens are encouraged to report the charity to authorities.

Allow this to serve as a gentle reminder that predators are on the prowl 24/7 everywhere throughout the world. Please stay vigilant, folks.


Nonprofits Need to Think about Security

Preventing fraud in nonprofits is sometimes just a matter of actually thinking about accountability. The Lumberton High School band’s booster club had one person handling the mostly cash donations that they took in, which is how that person managed to steal over $70,800 dollars from the group.

If there had been even one additional person responsible for that money, that theft could likely have been reduced or even prevented. The nonprofit sector is so vulnerable to fraud because, unlike the for-profit or public sectors, there are far less security measures in place, either required by law or simply put in place by ethical practices. While there are certainly more security minded nonprofits out there, most are small organizations with few employees that, though they mean well, can easily succumb to relatively simple fraud schemes.

So how do we fix this? By becoming, as an entire sector of the economy, more security conscious. This means more checks and balances. Everything from writing ethical guidelines to tasking multiple people with keeping track of donations and expenditures should be included. For some nonprofits, it could even mean not taking cash donations at all, or at least making it a rule that two people have to be working together when accepting such donations.

The needs of an individual organization are going to vary, of course, which means that the security concerns will vary as well. But the first step has to be realizing that security is a concern, and then sitting down to address it. Even if an organization has no history of fraud, that doesn’t mean it will never be subject to it in the future.

In the case of the aforementioned Lumberton band booster club, that theft was happening over several years, so its possible to have a history of fraud without even knowing it. Why should an organization wait until after they’ve been victimized to put preventative measures in place?


Don’t Forget to Celebrate Giving Tuesday

It’s incredibly ironic that immediately following Thanksgiving, people are willing to trample one another for the best sales deals. Here’s a better proposal: instead of participating in Black Friday, why not participate in Giving Tuesday? It’s certainly a lot more in line with the spirit of Thanksgiving.

For those of you who’ve never heard of Giving Tuesday before, it’s like a national holiday for charitable donations. It takes place on the Tuesday following Thanksgiving, which would be November 29 this year. Social media users created the “holiday” as a pushback against the greed and selfishness that’s displayed after Thanksgiving. #GivingTuesday is now a popular hash tag on Twitter.

But the best part about Giving Tuesday is that there isn’t one specific charity that people are encouraged to donate to. Those who wish to participate can donate to any organization they choose. However, we at Philanthropic People always advise you to do your research before making any contributions. Readers should know that every year during the holidays, there is an increase in the amount of scam charities.

Ken Berger, CEO of Charity Navigator, knows this all too well.

“Because so much money is being given out during this time, by extension the scammers and the thieves know this is the time to exploit people the most,” Berger warned. “The causes that we find scammers are drawn to the most are the ones that the American public really resonates most powerfully with. So examples are charities that are meant to support the families and people themselves who have risked their lives for our country: police, firefighters, veterans. And in another group are charities that are meant to help children—children with cancer, children with disabilities.”

The easiest way to protect yourself from fraud is to educate yourself on what to look out for. A complete list of scam charity warning signs can be found here.


A Comprehensive List of 35 Fake Charities

Charity Navigator, America’s largest independent charity analyzer, has just released a list of 35 fake charities. None of these charities are registered as 501(c)(3)s, making their public donation solicitations illegal. Unfortunately, this also means that any donations made to these charities are not tax deductible. In most cases, once the donation has been made, there is no chance of getting it back. Take a look at the list below and make sure to share it on social media to protect other donators from being scammed.

  1. Boobies Rock!
  2. Care Package Campaign
  3. Community College Consortium on Autism and Intellectual Disabilities
  4. Delaware Firefighters Foundation
  5. Disabled Veterans of America
  6. Employ Young Adults
  8. FM World Charities
  9. Fresh Start Opportunities
  10. The Herron Foundation
  11. I Care Foundation
  12. Juniata Community Mental Health Clinic
  13. Long Island Responds
  14. Matthew M. Brennan Foundation
  15. National Foundation of America
  16. New Hampshire Wildlife Parks & Wildlife Rescue
  17. New Jersey Youth Club
  18. One Child Saved
  19. One Church! One Can! One Night!
  20. One Door for Education, Inc.
  21. Paralyzed American Veterans
  22. RRR Service Dogs
  23. Safety Publications
  24. Say No 2 Cancer
  25. The Se7ven Group
  26. Southeast K9 Search and Rescue
  27. Spotlight on Heroes
  28. Tackle Hatred Now
  30. United Soldiers Outreach LLC
  31. United States Disabled Veterans
  32. United States Handicapped-Disadvantaged
  33. Veterans Helping Nevada Veterans
  34. Winged Warriors
  35. Winning Ways

To avoid being scammed, Charity Navigator always advises donators to request the organization’s Employee Identification Number (EIN). An EIN can be used to verify whether the organization is registered as a 501(c)(3) nonprofit. However, take note that even official 501(c)(3) status offers no guarantee that the organization is legitimate. Further research is needed to fully evaluate whether a charity is worth donating to. One key thing to look for is tax information. Genuine organizations will openly provide this information, as well as a complete breakdown of how donations are spent. For more information on how to protect against charity fraud, click here.

News The Power of Giving

New Bill Would Make Investigating Charity Fraud More Difficult

A bill introduced to the House of Representatives and awaiting a vote would make “dark money” untraceable, which poses some risks to charity fraud investigations. “Dark money” refers to anonymous donations to nonprofits, usually politically active groups, that allow wealthy people to donate money without attracting attention to themselves. It’s become a huge issue in politics of late, especially since the Citizens United victory in 2010 that allowed for unlimited spending by corporations and other entities on political campaigns. This presidential election season is already gearing up to cost more than twice the 2012 race.

The bill would eliminate an IRS mandated donor-disclosure requirement, meaning that groups wouldn’t have to say who gave them money. Supporters say this protects the First Amendment rights of donors and protects them from political pressure and the like. Meanwhile, opponents say that it would make it difficult for fraud investigations to determine who donated to charities and whether or not there are conflicts of interest there. It would also prevent them from determining if charities moved funds between one another.

Charity fraud is a serious issue, and although it doesn’t happen all that often, only about 1% of annual giving is affected, it’s still something that needs to be investigated. Especially since when it does come to light, it tends to get a lot of press and damage the nonprofit sector’s image. Adding fuel to opponents’ arguments against the bill are the supporters themselves, most notable Citizens United and the Koch Brothers. If you’ve been following politics for the last decade, especially campaign finance, then you know that these groups have never had the best interest of American’s at heart, but only those of billionaires and corporations. This bill is simply another attempt to increase their own power, while denying the government the ability to keep them in check, and this time it’ll make fraud easier.


Couple Who Ran Fraudulent Charity Face 20 Years in Prison

The founders of a charity based in San Diego were convicted of fraud and theft on July 10th, and could face up to 20 years I prison. Kevin Lombard and Judith Paixao ran the Wounded Marine Careers Foundation from 2007 to 2009, which purported to train wounded veterans for jobs in the movie industry. A 10-week course was supposed to train them in new job skills and get them membership in the International Alliance of Theatrical Stage Employees for a hefty price tag of $88,000. That’s about as much as accredited film schools charge for a three-year program. Dozens of marines had their courses paid for with a $1.2 million grant from the Department of Veterans Affairs.

However, it turns out that the charity wasn’t delivering. They failed to provide some of the training and equipment, which left some trainees without the skills they went there to learn. Some of the trainees had to go so far as to bring their own equipment. Instead, it seems that they used that money to pay for personal items. The couple used these funds to pay for a trip to Bermuda, expensive meals, and a sailing trip around San Diego Bay.

In addition, Paixao also defrauded another charity, the Bob Woodruff Foundation, of $100,000 dollars. She claimed that the money was going to help a marine who had already dropped out of the program.

The issue came to light in 2009, when several veterans who were in the first graduating class filed complaints against them. Among other things, it turns out that the $88,000 came primarily from veteran’s benefits, and that the purported price for a course was only $10,000. Needless to say, a number of trainees in the program felt betrayed. Three veterans took the stand during the trial.


FTC Alleges Four Charities Stole $187 Million

The Federal Trade Commission, in a joint effort with attorneys general of all 50 states, have announced that a group of charities, purportedly started to help cancer survivors, are fraudulent. The Cancer Fund for America, the Breast Cancer Society, the Children’s Cancer Fund of America, and Cancer Support Services are alleged to have defrauded donors of $187 million between 2008 and 2012.

The charities are all run by a single extended family. James Reynolds Sr., his son, and his ex-wife run all four charities between them, and over the years have used approximately 3% of the money they’ve raised to actually help cancer patients. The other 97% went directly to the family, and was spent on a variety of personal items, such as college tuition, dating website subscriptions, concert tickets, and cruises.

According to CNN, who investigated the charities in 2013 and 2014, the charities claimed to donate millions of dollars worth of goods to cancer patients overseas. Following up on supposed shipments to Guatemala, CNN could find no evidence that any such good were ever sent.

The organizations have refused to issue statements, even going so far as to state, on the Breast Cancer Society website, that they will not engage in a public legal battle, as it does not serve the people they purport to help. That group and the Children’s Cancer Fund of America are being dissolved, but the others remain. The government is seeking around $90 million in fines, but according to the FTC, few of the assets remain, and they would be lucky to recover about $1 million.

That such a small amount of the money stolen from charitable people can be reclaimed might be the worst part of the whole case. To take advantage of people in the name of charity is despicable, and while the case is not resolved yet, the evidence against these “charities” is quite strong. Hopefully, the FTC will be able to reclaim some of these assets and maybe that money can be put to good use.