Reposted from the This Week in Nonprofit Fraud Blog – September 8, 2014
September 4, 2014: Stan Curtis, a philanthropist who was recognized by Bill Clinton with the President’s Volunteer Action Award, has been sentenced to two years in prison after pleading guilty in June to theft. Curtis redirected $183,000 in donations from USA Harvest – a charity which he founded and led – to his personal bank account. The charity’s mission is to take leftover food from restaurants and hotels and give it to the hungry, a noble venture which garnered him prominence in both his local community and nationwide. Curtis also failed to report over $500,000 in income on his taxes from 2005 to 2008, instead claiming that USA Harvest had not reimbursed him for business travel. Of that money, he spent approximately $370,000 on meals, entertainment and travel. He has also been ordered to repay the $183,000 he stole.
See more on this case at The Courier Journal
- You couldn’t be much more highly revered than Stan Curtis. He founded a charity which fed the hungry, garnered support from people of influence and served as a community leader, activist and philanthropist. He even received an award nicknamed “The Nobel Prize of Goodness!” Despite all these accomplishments, Curtis still made the choice to steal from the charity and the community he represented.
- As sole officer of a large organization, Curtis should not have been handling cash contributions on behalf of the organization, which raises significant segregation of duties concerns. When he did, Curtis was able to easily divert the funds meant for the charity into his personal bank account.
Raffa Forensic Practice Tips:
- Although there is no such thing as a perfect preventative control system, and trust is not an internal control.
- Does your organization have a secure system in place to confirm donations and handle cash receipts?
September 4, 2014: Maurice William “Bill” Campbell’s 15 year prison sentence for 56 counts of wire fraud was upheld on appeal. Campbell was originally sentenced in March 2012 for stealing nearly $6 million from the Alabama Small Business Development Consortium while serving as State Director. A gifted lobbyist, while leading the organization, Campbell won $7.3 million in grants from the state of Alabama for the organization’s work helping small businesses. Campbell then funneled those funds through an intermediary, which just happened to be a private nonprofit which he founded and told legislators was simply a holding vehicle to disburse funds to the Consortium. The money was instead used to entertain and lavish gifts on “young college-age women” nicknamed “Little Sisters,” and support his lavish lifestyle including high-end cars, clothes, and vacations. As co-conspirators in the scheme, the two employees of Campbell’s nonprofit also both pled guilty to fraud-related charges. One employee described her job as “[making] the state’s money Sir William’s money.”
- Campbell allegedly recruited his co-conspirators with promise of a portion of the illicit funds for themselves, including free use of the organization’s credit cards. Collusive frauds often start like this – by promising a piece of the action, and therefore an incentive to keep quiet.
- Fraudsters, including Campbell, often exhibit behavioral red flags when it comes to their spending habits, lifestyle and travel arrangements. Campbell spent well above and beyond his means.
Raffa Forensic Practice Tips:
- Grantees should be subject to regular and surprise audits to monitor that the use of funds is in line with the grant’s purpose.
- Does your organization have formal monitoring procedures for grantees and subcontractors?
DON’T BE THE NEXT VICTIM OF FRAUD!
The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.
For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.
You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention: