Coddling the Nonprofit Criminals
posted on: Monday, August 31, 2009
Gary Snyder
She is a married mother of three and looks just like your sister, but she has done irreparable damage to the Ann Arbor Amateur Hockey Association. And, her case is another example of the spineless enforcement of our judiciary toward nonprofit malfeasants.
As the association’s former bookkeeper, The Detroit News noted that she pleaded guilty in June to two counts of embezzlement of nearly $1 million from the organization. She methodically emptied the treasury of the AAAHA over a two-year period to pay for diamond earrings, Cadillac Escalades and expensive trips.
The judge evidently felt sorry for her and didn’t like the probation department’s recommendation that she pay back $160,000---just enough to keep the association afloat. Instead, the judge cut it in half. The perpetrator says that she has paid back a quarter of a million dollars, but the association and the department say they haven’t seen a dime.
The rest of the sentence was not much tougher. Instead of prison, she got parole. Instead of paying all the money back, she needs to pay only $1500 a month. At that rate she will pay it off when she is 116 years old.
This is more the norm than most would think. There is plenty of evidence to underscore that assertion.
I have written extensively about charitable fraud. The coddling of the criminals by judges and prosecutors is rampant. Such lenient sentencing is under the guise of not overcrowding the jails or assuring that restitution is fully discharged. Most believe that if the convict is in jail they will be unable to pay what is owed. That is a spurious argument since studies have shown that very few convicts every pay their restitution and that nearly 50% never pay one penny.
With reference to sentencing, many perpetrators get a free pass. Their method of operation is to never steal anything small so that that they have the resources to defend themselves. Do it with impunity and then cry and plead for the mercy of the court.
We have seen it time and again. Many times prosecutors and often judges agree to sentences that seem laughable given the magnitude of the crime. On occasion some get a tough sentence because they do not even try to defend himself (see Bernard Madoff sentence of 150 years), but too few are strongly sentenced in order to send a message that malfeasance does not pay.
For years we have been comforted to know that our prosecutorial system would weed out the bad apples. But the tide is turning in favor of the crooks and with more frequency they are turned out on the street with little more that a slap on the wrist.
There are several reasons for lack of stringent enforcement.
For example, use my home state of Michigan, which is typical. Jails are crowded so in August 2007, the chief judge of the circuit court ordered sentence reductions for 266 prisoners at the county jail to alleviate chronic overcrowding. The day the order was issued, 45 percent of the inmates were released. Since August 2005, more than 1,800 inmates have been released.
The overcrowding and other issues have consequences. We are seeing prosecutors suggesting, and judges giving, lighter sentences. We are seeing an extraordinary inconsistency in sentencing.
Take for example these:
Again in Michigan, despite being charged with stealing $250,000---a 15 year felony--- from the Juvenile Diabetes Research Foundation and pleading guilty, the executive got no jail time.
No victims, no problem.
We recently saw a once-powerful former Pennsylvania state senator get a relative slap on the wrist for the following: obstruction of justice for destroying evidence, stealing from a nonprofit, using taxpayer dollars to snoop on political enemies and ex-girlfriends, taking advantage of his board position on another charity by taking free trips and pocketing more than $4 million. With 137 corruption counts and federal guidelines recommending 21-27 years the Judge sentenced him to a little over 55 months in prison (12 days per felony) and restitution. This lean sentence drew a response from thousands of citizens expressing their dismay.
In Montana, the former chairman of the annual East/West Shrine football game was given a six-year suspended sentence for stealing $40,000 from the charity event. He wrote checks to himself from the Shriners' bank account during a 2 1/2-year period. No jail time for this very prominent executive.
The soft sentencing has consequences. In Delaware, Jody Chubbs first embezzled from her employer while on parole for embezzling from a previous employer. She then wrote thousands in bad checks, stole money from customers of a towing business she operated and -- after her arrest and indictment in federal court -- stole the identity of a childhood friend. Chubbs appeared to show no remorse for stealing more than $367,000 in various forms. Her apology was, "I never meant to hurt anyone."
No harm, no foul.
There was an airtight case at Fiver Rivers Community Development in South Carolina where an executive stole hundreds of thousands of dollars of state and federal grant money. Who is watching the money? Her daughter: hired as chief financial executive and had no financial experience. They used agency money for a high life by traveling, buying jewelry, high-definition television sets and sharing some of the assets with relatives. The mother and daughter pleaded guilty. Neither will serve jail time. Both will have 5-year probation and restitution was ordered.
There was a legal settlement at the American Veteran Relief Foundation and attendant funds. The leaders stole over $19 million and settled for a $19 million fine that was waived by the FTC because of inability to pay.
Lots of stolen money to defend, not an issue
In New York City, an $880,000 theft from the Whitney Museum received 200 hours of community service; the executives that looted the Gloria Wise Boys and Girls Club of $1.2 million were ordered to repay only $70,000.
On the other hand:
In Washington DC, a $4,000 theft at the Washington Teacher’s Union received an eleven year sentence, while a $47,000 theft from the Vietnam Veterans of America received 5 years in prison. The president of the Crow Creek Tribal School received 26 months in prison for a $6000 theft and a $51,000 theft at the Van Buren Police Department drew 5 years in prison.
The inconsistency in sentencing is overwhelmingly in favor of leniency for the perpetrator. With an adequate defense, the chances of jail are minimal. Without high priced legal counsel, the defendant gets the opposite results. Big thefts result in better defense.
With seldom jail time and little chance of restitution being fully discharged, where are the disincentives to not engaging in contemptible behavior?
Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.Labels: charity, charity fraud, nonprofit embezzlement, nonprofit fraud
She is a married mother of three and looks just like your sister, but she has done irreparable damage to the Ann Arbor Amateur Hockey Association. And, her case is another example of the spineless enforcement of our judiciary toward nonprofit malfeasants.
As the association’s former bookkeeper, The Detroit News noted that she pleaded guilty in June to two counts of embezzlement of nearly $1 million from the organization. She methodically emptied the treasury of the AAAHA over a two-year period to pay for diamond earrings, Cadillac Escalades and expensive trips.
The judge evidently felt sorry for her and didn’t like the probation department’s recommendation that she pay back $160,000---just enough to keep the association afloat. Instead, the judge cut it in half. The perpetrator says that she has paid back a quarter of a million dollars, but the association and the department say they haven’t seen a dime.
The rest of the sentence was not much tougher. Instead of prison, she got parole. Instead of paying all the money back, she needs to pay only $1500 a month. At that rate she will pay it off when she is 116 years old.
This is more the norm than most would think. There is plenty of evidence to underscore that assertion.
I have written extensively about charitable fraud. The coddling of the criminals by judges and prosecutors is rampant. Such lenient sentencing is under the guise of not overcrowding the jails or assuring that restitution is fully discharged. Most believe that if the convict is in jail they will be unable to pay what is owed. That is a spurious argument since studies have shown that very few convicts every pay their restitution and that nearly 50% never pay one penny.
With reference to sentencing, many perpetrators get a free pass. Their method of operation is to never steal anything small so that that they have the resources to defend themselves. Do it with impunity and then cry and plead for the mercy of the court.
We have seen it time and again. Many times prosecutors and often judges agree to sentences that seem laughable given the magnitude of the crime. On occasion some get a tough sentence because they do not even try to defend himself (see Bernard Madoff sentence of 150 years), but too few are strongly sentenced in order to send a message that malfeasance does not pay.
For years we have been comforted to know that our prosecutorial system would weed out the bad apples. But the tide is turning in favor of the crooks and with more frequency they are turned out on the street with little more that a slap on the wrist.
There are several reasons for lack of stringent enforcement.
For example, use my home state of Michigan, which is typical. Jails are crowded so in August 2007, the chief judge of the circuit court ordered sentence reductions for 266 prisoners at the county jail to alleviate chronic overcrowding. The day the order was issued, 45 percent of the inmates were released. Since August 2005, more than 1,800 inmates have been released.
The overcrowding and other issues have consequences. We are seeing prosecutors suggesting, and judges giving, lighter sentences. We are seeing an extraordinary inconsistency in sentencing.
Take for example these:
Again in Michigan, despite being charged with stealing $250,000---a 15 year felony--- from the Juvenile Diabetes Research Foundation and pleading guilty, the executive got no jail time.
No victims, no problem.
We recently saw a once-powerful former Pennsylvania state senator get a relative slap on the wrist for the following: obstruction of justice for destroying evidence, stealing from a nonprofit, using taxpayer dollars to snoop on political enemies and ex-girlfriends, taking advantage of his board position on another charity by taking free trips and pocketing more than $4 million. With 137 corruption counts and federal guidelines recommending 21-27 years the Judge sentenced him to a little over 55 months in prison (12 days per felony) and restitution. This lean sentence drew a response from thousands of citizens expressing their dismay.
In Montana, the former chairman of the annual East/West Shrine football game was given a six-year suspended sentence for stealing $40,000 from the charity event. He wrote checks to himself from the Shriners' bank account during a 2 1/2-year period. No jail time for this very prominent executive.
The soft sentencing has consequences. In Delaware, Jody Chubbs first embezzled from her employer while on parole for embezzling from a previous employer. She then wrote thousands in bad checks, stole money from customers of a towing business she operated and -- after her arrest and indictment in federal court -- stole the identity of a childhood friend. Chubbs appeared to show no remorse for stealing more than $367,000 in various forms. Her apology was, "I never meant to hurt anyone."
No harm, no foul.
There was an airtight case at Fiver Rivers Community Development in South Carolina where an executive stole hundreds of thousands of dollars of state and federal grant money. Who is watching the money? Her daughter: hired as chief financial executive and had no financial experience. They used agency money for a high life by traveling, buying jewelry, high-definition television sets and sharing some of the assets with relatives. The mother and daughter pleaded guilty. Neither will serve jail time. Both will have 5-year probation and restitution was ordered.
There was a legal settlement at the American Veteran Relief Foundation and attendant funds. The leaders stole over $19 million and settled for a $19 million fine that was waived by the FTC because of inability to pay.
Lots of stolen money to defend, not an issue
In New York City, an $880,000 theft from the Whitney Museum received 200 hours of community service; the executives that looted the Gloria Wise Boys and Girls Club of $1.2 million were ordered to repay only $70,000.
On the other hand:
In Washington DC, a $4,000 theft at the Washington Teacher’s Union received an eleven year sentence, while a $47,000 theft from the Vietnam Veterans of America received 5 years in prison. The president of the Crow Creek Tribal School received 26 months in prison for a $6000 theft and a $51,000 theft at the Van Buren Police Department drew 5 years in prison.
The inconsistency in sentencing is overwhelmingly in favor of leniency for the perpetrator. With an adequate defense, the chances of jail are minimal. Without high priced legal counsel, the defendant gets the opposite results. Big thefts result in better defense.
With seldom jail time and little chance of restitution being fully discharged, where are the disincentives to not engaging in contemptible behavior?
Gary R. Snyder is the author of Nonprofits: On the Brink. He is a frequent lecturer and author of articles in numerous publications and blogs. His email is gary.r.snyder@gmail.com; website: www.garyrsnyder.com, phone: 248.324.3700.
Labels: charity, charity fraud, nonprofit embezzlement, nonprofit fraud
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