United Way and Financial Abuse
Date: October 16, 2003 10:46PM
October 16, 2003
United Way and Financial Abuse
I had to go to the US Labor Department website to find out who was the invisible Labor Secretary of the Bush administration. I was surprised to find out that the current Labor Secretary was a Chinese-woman, named Elaine L. Chao. Now, I am beginning to understand why so many jobs in the United States are being outsourced to Asia. (Maybe there is a connection here.)
After reading Elaine L. Chao's biography, I learned that among her credentials to become Labor Secretary, she claims that as President and Chief Executive Officer of United Way of America, she restored public trust and confidence after the organization was tarnished by mismanagement and financial abuse, thus preserving the nation's largest institution of private charitable giving.
United Way and "Financial Abuse, Fraud, and Embezzlement."
Elaine L. Chao replaced the former United Way of America President, William Aramony, who was fired in 1992 under accusations of fraud and conspiracy. He and other former members of management were convicted by a federal jury in 1995. Since that time, these men have been serving their sentences in federal prisons.
Financial abuse, fraud, embezzlement, and mismanagement did not taint the United Way only before Ms. Elaine L. Chao's arrival at that organization; there were plenty of financial abuse, fraud, embezzlement, and mismanagement also following her departure from the organization. If she had done such a good job at the United Way during her tenure, then why were there so many financial abuse, fraud, embezzlement, and mismanagement cases since she left the organization? There were other cases of embezzlement, fraud, and major mismanagements in the United Way System, but here I list just a few cases to show what I mean.
On January 22, 2003 the Lansing State Journal published an article by Tim Martin 'Charity puts estimate of money lost at $1.9 million. The amount is double what United Way said in civil suit.' The article also said: "Nearly $1.9 million was stolen from the Capital Area United Way during the past seven years, charity leaders estimated Tuesday. That's twice as much money as charity officials thought when they filed a civil suit last month claiming embezzlement by a former employee. "This is an extremely bitter pill," Capital Area United Way President Bob Berning told his board of directors Tuesday. "It sickens me."
…The East Lansing-based United Way accused former finance chief Jacquelyn Allen-MacGregor of the theft in a civil suit filed in Ingham County Circuit Court. …Last month, charity officials said they were hopeful the incident was confined to 2001 and 2002 - the last two years of Allen-MacGregor's 20-year tenure with the United Way. …But after reviewing records from 10 banks, the charity says it appears Allen-MacGregor was cashing stolen checks made payable to herself at least as early as 1996.
…Some of Allen-MacGregor's assets - including an estimated 60 horses - soon could be for sale. Proceeds would help repay the United Way if the charity wins its civil suit. …The selling of her assets, most related to a business called Celebration Quarter Horses. Some of Allen-MacGregor's horses might be worth more than $10,000 each.
In another case, on August 15, 2003, The Washington Post published an article: 'United Way's Fate,' the article said the following: "THE PILLAGING of this region's United Way organization turns out to have been uglier than even the initial, grotesque discoveries indicated. The sloppy, secretive bookkeeping, lavish salaries and shameful spending sprees first uncovered were revolting enough; but according to an audit recommended by an outside ethics panel that examined past practices of the agency, the longtime, now-retired head of the organization, Oral Suer, received more than $1.5 million in apparently improper or questionable payments from the organization during his 27-year tenure.
As reported by The Post's Jacqueline L. Salmon and Peter Whoriskey, the audit also names five other current or former employees as having spent an additional $69,500 in expenses lacking documentation. The findings point to a betrayal of trust by a handful of officials, and a draining of money meant to help residents in dire need. Federal investigators are looking into the spending, and the all-new leadership at United Way has filed two lawsuits against Mr. Suer alleging that he defrauded the charity. There has been no public comment from Mr. Suer. …The true victims of the United Way scandals, the homeless, hungry and helpless, should not have to suffer another year of privation because of the unseemly greed of those who misused their position and sullied United Way's reputation."
On September 20, 2002 United Way of the National Capital Area, in Washington D.C., appointed Mr. Robert Egger as interim executive vice president to restore public confidence in that United Way. He was hired right after the scandal at the National Capital Area United Way became public knowledge. That particular United Way is considered to be a large organization in terms of individual United Ways; they raised $ 94 million dollars in 2001.
Even though that United Way was of significant size, the first thing that Mr. Egger announced in his effort to regain the public trust, was to insist on a salary that, at $ 85,000 a year, was a third of what his predecessor received. Depending where you live in the United States the average giver to a local United Way is someone who makes from 25 to 40 thousand dollars per year.
On a smaller scale, on August 16, 2003 the Lodi News-Sentinel, CA published an article: 'United Way employee pleads guilty in embezzlement case.' "A United Way employee accused of embezzling more than $200,000 from the San Joaquin County nonprofit organization pleaded guilty Friday to all 23 felony charges against her. Corrine Cervantes, 46, had pleaded innocent in March, but on Friday she pleaded guilty to 19 counts of forgery and four counts of embezzlement, said Deputy District Attorney Scott Fichtner."
Following the footsteps of for-profit companies such as Enron and WorldCom, new information suggest that not-for-profit organizations such as the United Way, also use questionable accounting practices to deceive the public.
On November 19, 2002 The New York Times published an article by Stephanie Strom: "Questions Arise on Accounting at United Way," among other things she said in the article: "Some United Way organizations, trying to appear more successful and more efficient with their donors' money, are counting contributions in ways that make the numbers look more robust - and expenses look smaller.
In a number of cases, including two of the largest United Ways - those in Washington and Chicago - different organizations counted some of the same contributions, thus inflating not only their own numbers but the system's totals, according to United Way executives.
…Each time a case of double counting has arisen, United Way of America executives have said it is limited to a particular United Way. They defend the other practices that have been called into question.
But executives at some local United Ways are less certain. After reading in newspapers about questionable accounting and financial management at the United Way of the National Capital Area in Washington last January, "I felt chilled because I had seen some similar things in other United Ways," said Brian T. Hassett, who served as president of the United Way in Chicago until recently.
Les White, a former county manager in San Jose, Calif., said he saw some of the same things when he was brought in to resuscitate the United Way Silicon Valley. "Some of what I read about in Washington, D.C., sounded so familiar," he said. "It's myopic to insist that these problems are only in one place."
The New York Times article was very long, but the above information gives you the flavor of the problems afflicting the United Way System today. The current president of the United Way of America knows that in the charity business the name of the United Way is becoming associated more and more with financial abuse, mismanagement, fraud, and embezzlement and he is trying very hard to save the United Way from going the way of Enron and WorldCom.
Once again, after reading Elaine L. Chao's biography, for someone who was hired to clear the name of a tarnished organization, as anyone can see by the many scandals that followed after her departure from the United Way, in my opinion, her tenure at the United Way was a major failure. If anything, financial abuse, fraud, embezzlement and mismanagement became a regular occurrence in the United Way organization since that time.
Why Elaine L. Chao has not yet been fired as Labor Secretary, it is a mystery to me. In my opinion, she is doing as poor of a job as Labor Secretary of the United States, as she did as president of the United Way of America. I am not surprised that the Labor Department under Ms. Chao's management is consistently producing data about the unemployment rate in the United States that can be considered nothing more than garbage. The 3.5 million jobs that disappeared from the US economy since January 2001, leaves no doubt that she is an inefficient Labor Secretary, and should be replaced immediately.
George W. Bush and his administration are not losing credibility only at home. The Bush administration has consistently been losing credibility around the world about everything, and they raised the bar regarding government incompetence. I believe that when George W. Bush loses the election in 2004, he will leave such wreckage behind for the next administration, that not even a smart man with the skills of an extraordinary President such as Bill Clinton, would be able to fix the mess.