Looking forward to seeing you all virtually today. Here is the agenda.
Jackson County Charity Embezzlement Case Highlights Need for Nonprofit Oversight
A Wellston woman who stole charitable funds from a local booster club was sentenced Wednesday to one year of community control and will repay the more than $9,000 that she took, Ohio Attorney General Dave Yost and Jackson County Prosecutor Randy Dupree announced.
Melanie Stanley had originally faced a fourth-degree felony charge of grand theft for misusing funds from the Wellston City School District’s volleyball booster program, The Spike Club (formerly the Wellston Match Point Club). In early June, though, Judge Christopher Regan of Jackson County Common Pleas Court accepted Stanley’s guilty plea to a lesser charge of misdemeanor theft after Stanley agreed to pay back the stolen money.
“She stole from the team and abused the trust of parents,” AG Yost said. “No matter how big or small the organization, thieves looking to set themselves up with charitable funds need to know that they’re playing a losing game.”
The Attorney General’s Charitable Law Section helped the Wellston Police Department investigate the case after booster club volunteers reported discrepancies in the nonprofit’s accounts to the police.
The volunteers said Stanley was the only officer with access to the accounts, and that she had used the charitable funds to make large personal purchases and issue checks to family members.
“Just as good teamwork can lead to victory, keen oversight can assure charitable dollars serve their intended purpose,” said Jackson County Prosecutor Randy Dupree. “We’re grateful for the collaborative investigation to put the money back in the hands of the booster club where it belongs.”
Attorney General Yost said the case highlights the need for oversight in the charitable sector, noting how a passive board of directors and poor internal controls can spell disaster for a charity.
Coinciding with the adjudication of the Jackson County case, Yost also announced today that four new web-based trainings are available under the office’s Charitable University platform (Charitable U.), which launched in January:
- Governmental Filings and Recordkeeping
- Board Policy Considerations
- Avoiding Theft and Internal Controls
- Charitable Gaming
Charitable leaders who complete trainings in each of the four Charitable U. “pillars” will have their name and organization listed on the AGO website as a way to salute their efforts. They also receive a completion certificate that can be shared with funders as a way to reinforce their organization’s commitment to sound policies of board governance.
Charitable U. trainings are required for nonprofit agencies applying for grants from the office.
The Ohio Attorney General plays a critical role in the charitable realm as the state officer charged with protecting and regulating the sector. The office’s Charitable Law Section regularly holds trainings and conducts outreach to educate Ohio’s 60,000+ nonprofits on their legal obligations.
Former Columbus Zoo Executives Indicted for Theft of More Than $2 Million
Three former executives of the Columbus Zoo and Aquarium were indicted today for their roles in a scheme to defraud the zoo of more than $2.29 million and use the money for personal benefits, Ohio Attorney General Dave Yost announced today.
“I’m confident that when the allegations are heard in the court of law, the jury will agree that these former executives of the Columbus Zoo extorted, conspired, bribed and stole over $2 million in public funds for their own benefits,” Yost said. “In simple terms, the bank hired the robbers to work security.”
Former Chief Executive Officer Tom Stalf and former Marketing Director Pete Fingerhut are accused of operating a criminal enterprise to hijack the zoo’s purse strings and colluding to conceal their thievery. Also indicted was former Chief Financial Officer Greg Bell, who is alleged to have become ensnared in the wrongdoing.
The indictment alleges that the former executives manipulated credit-card and check authorization forms for more than a decade, using the nonprofit’s public funds for personal use. The Columbus Zoo receives about $19 million in taxes annually from Franklin County residents.
The stolen money was spent on lavish non-zoo related items, including suites and tickets to concerts and sporting events; golf memberships; trips to multiple states and foreign countries; meals, beverages and alcohol; and motor vehicles.
An investigation conducted by the attorney general’s Charitable Law and Antitrust sections, along with the Ohio Auditor’s Office, found that the criminal enterprise not only improperly expensed goods but also bartered, bribed and extorted zoo vendors for goods and services.
In one instance, zoo tickets were exchanged for tickets to Game 6 of the 2016 World Series. On another occasion, Fingerhut is accused of threatening harm to a vendor’s business opportunities with the zoo unless he was paid large sums of cash.
Stalf, Fingerhut and Bell allegedly attempted to conceal their criminal activities by knowingly signing financial authorization forms. In subsequent years, Stalf and Fingerhut filed their state and federal taxes without acknowledging the financial benefits obtained from the criminal enterprise.
The indictment was filed today in Delaware County Common Pleas Court, as the zoo is located in Delaware County and much of the criminal conduct found by the grand jury took place at the zoo business office.
As the investigation unfolded, Delaware County Prosecuting Attorney Melissa Schiffel appointed the Attorney General’s Office as special prosecutor in the matter, with Senior Assistant Attorney General Dan Kasaris becoming the lead prosecutor. Marissa Gibson and Matt Klapheke, investigators with the Ohio Auditor’s Office, assisted in the case.
“The Columbus Zoo is a jewel and I hope that this investigation will ensure that the zoo will exist for many years to come,” Prosecutor Shiffel said. “Thank you to the Delaware County grand jurors who listened to countless hours of testimony and evidence and returned the indictment that was filed today.”
The agenda is out for the 2023 NAAG/ NASCO Charities Conference…. Get registered today ….
AG Ferguson files lawsuit against founder of Vancouver charity for misusing more than $1.2 million meant to serve BIPOC communities
Attorney General Bob Ferguson today announced a lawsuit against Vancouver nonprofit Noble Foundation and its founder and executive director, Ophelia Noble, along with foundation directors, and Noble’s family and friends. Ferguson asserts since 2019, Noble misappropriated or failed to account for $1 million in charitable grants the foundation received to serve communities of color in southwest Washington.
In a lawsuit filed in Clark County Superior Court, Ferguson asserts Noble paid herself hundreds of thousands of dollars from foundation funds, used foundation money to buy vehicles for herself and her mother and directed the foundation to buy her father’s house then resell it to her at a deep discount. The lawsuit names Noble, the Noble Foundation, foundation directors Douglas Noble (Noble’s father), Alice Prejean (Noble’s mother), Alyce Noble, Joann Hampton and Virginia Prioleau.
Noble’s misconduct includes numerous violations of Washington’s Nonprofit Corporation Act, with potential penalties of up to $5,000 per violation. Ferguson will ask the court to order Noble and her co-defendants to return the diverted money so that it can be directed to an organization that can use it for its intended charitable purposes, dissolve the foundation and bar Noble and her other co-defendants from serving on the boards of any Washington nonprofit in the future.
“Preying on the generosity of Washingtonians is shameful — and unlawful,” Ferguson said. “We will hold those responsible accountable and work to ensure the diverted money is paid back and directed towards its intended purpose: advancing racial equity and serving communities of color.”
Noble Foundation was founded to serve BIPOC communities
Ophelia Noble started The Noble Foundation in 2012 to serve communities of color in Vancouver, Kelso and Longview.
In 2019, the foundation expanded rapidly, securing hundreds of thousands of dollars from the Washington State Office of Financial Management as part of a state effort to encourage members of undercounted Black, Indigenous and People of Color (BIPOC) communities to register for the 2020 Census.
The foundation continued to grow when the pandemic hit. Operating as Our Place/Nuestra Casa Multicultural Center, the foundation provided emergency rent assistance, cash assistance for general household needs, and community education about the dangers of COVID-19 and the importance of vaccinations. It subsequently secured major contracts with counties and the state to facilitate the Treasury Rent Assistance Program and Eviction Rent Assistance Program, disbursing more than $1.3 million on behalf of Clark County and the Washington State Department of Commerce between 2021 and 2023.
As public attention focused more sharply on racial justice and policing issues, the foundation created Southwest Washington Communities United for Change, a tax-exempt social welfare organization. Southwest purportedly focused on organizing protests and trying to increase participation and political representation for BIPOC communities in Clark and Cowlitz counties. Southwest brought in several hundred thousand dollars from grantors interested in establishing a BIPOC-led political organization serving Southwest Washington.
It appears that most of the public dollars received by the foundation and its related entities were spent properly and not misappropriated. However, large grants from private and community foundations, were not subject to the same level of fiscal controls. The nonprofits raised approximately $1.5 million from such foundations including the Northwest Health Foundation, Social Justice Fund Northwest, the Satterberg Foundation, the Community Foundation for Southwest Washington, Group Health/Inatai Foundation and the Seattle Foundation.
Misappropriations go back years
Beginning in 2019, Noble used her position as executive director to misappropriate large sums of donated charitable funds from the foundation’s accounts.
The Attorney General’s investigation revealed that Noble and her family received direct, documented payments or benefits of nearly $1 million. Some examples:
- In July 2021, Noble caused the foundation and Southwest to pay her $355,000 in “back pay,” for “contract services” purportedly provided between 2015 and 2021. There is no evidence that any contracts existed, any money was owed, or that these payments were approved by the entities’ boards.
- The foundation paid Noble’s consulting company $310,000 for unspecified “executive director services” that were never approved by the board.
- $200,000 was either withdrawn from the various foundation entities’ bank accounts without explanation or issued to unknown individuals in the form of cashier’s checks. Only Noble and the directors were authorized signers on these accounts.
- In 2020, Noble directed the foundation to purchase her father’s house for approximately $200,000, but she put her name on the deed as well as the foundation’s. The following year, she paid the foundation $100,000 for its interest in the home. When the foundation transferred title to Noble in 2022, the house was worth at least $324,000, meaning Noble gained $224,000 in equity. There is no evidence the foundation’s board reviewed and approved these transactions, which were clearly a conflict of interest for Noble.
- In 2020, Noble used foundation money to purchase a 2019 Nissan Armada, which she used as her personal vehicle. She used foundation funds to make upgrades to the vehicle and cover maintenance and gas. The foundation also purchased a second vehicle, which Noble later transferred to her mother.
- Noble, her family, and other directors used foundation money to fund over $65,000 in additional purchases that lack a clear connection to the entities’ charitable purposes, including for gift cards, meals, groceries, gas, travel, cell phones, personal clothing, and even alcohol and cigarettes.
Other charity lawsuits
The Legislature identified the Attorney General’s Office as the agency tasked with enforcing the Nonprofit Corporation, Charitable Solicitations and Charitable Trust Acts. These laws ensure that nonprofits and entities that solicit charitable donations or manage charitable assets follow the laws adopted by the Legislature. These laws ensure that funds intended for charity are not misused.
The Attorney General’s Office has three attorneys who specifically focus on charity cases involving the misuse or misappropriation of funds solicited for a charitable purpose.
Recent enforcement actions include:
- A $300,000 judgment against a family that operated a group of sham charities purporting to help cancer patients and vulnerable children but used the donations to enrich themselves.
- A $1 million judgment against charities that claimed to help veterans over what a judge ruled was “deceptive” and “abusive” conduct.
- A million dollars recovered for a veterans’ nonprofit after its leadership failed to pay wages to its veteran employees. The director used charity funds for her own personal expenses, including gambling at casinos. As a result of the Attorney General’s case, the executive director and board members were removed from the nonprofit and barred from working for any Washington nonprofits in the future.
- A $495,000 judgment against two companies that made more than one million robocalls in Washington state for scam charities. The $495,000 payment went to legitimate charities.